Former ASC staffer Peter Francis – who is also a former authorised representative of Dover Financial Advisors – has lashed out against the regulator’s approach to enforcement and litigation proceedings, telling InvestorDaily there are fundamental reasons “ASIC loses a lot of court cases”.
“The issue with ASIC is that they pursue all these court cases but they only work 38-hour weeks compared to 90 [hours] on the other side,” Mr Francis said. “They behave like public servants and have no understanding of the markets. A majority of its senior executives are lawyers, and think and act like lawyers.”
Expanding on his views in a formal submission to the Senate inquiry into ASIC’s performance, Mr Francis said he has been involved in more than 1,000 legal matters involving the corporate regulator, which has helped him form this opinion of ASIC’s inadequacy.
However, Mr Francis also has personal experience with the corporate regulator that may influence his opinions. “I did not know how bad things had got with ASIC until it happened to me,” Mr Francis wrote in the submission.
Mr Francis, who at that time was director of Dover authorised representative firm Ocean Financial Pty Ltd, entered into legal proceedings against his former licensee in 2009 over a disputed breach report.
The incident led Mr Francis to believe he was under investigation by ASIC, an assumption that was furthered by the testimony of two “market participants” who claimed they had been approached by the corporate regulator for information about Mr Francis’ business.
According to the submission, several years later Mr Francis was informed by ASIC’s NSW Regional Commissioner that he had never been under investigation – but by that time Mr Francis contends the reputational damage had been done.
“ASIC has put the perception into the financial market that I have done something wrong and to date has not in any way attempted to have it remedied,” Mr Francis said. “They do not want to consider the ramifications of their actions.
“All of my clients have been lost as a consequence of ASIC’s [intervention],” he told InvestorDaily. “I have three years of lost income, and now cannot be employed in the industry.”
Under the terms of a settlement agreement between Mr Francis and his former licensee, Mr Dover reportedly withdrew its allegations against Mr Francis and jointly applied for a ‘no-action letter’ from ASIC clearing Mr Francis’ name.
ASIC declined to issue the no-action letter, informing Mr Francis the corporate regulator only issues such statements where it would “serve a clear regulatory purpose to provide a no action letter to an applicant”.
In response, Mr Francis sought the jurisdiction of the Commonwealth Ombudsman, who – in a letter dated 2 September 2013 – declined to overturn ASIC’s decision not to issue a no-action letter, but recommended pursuing compensation through the Australian government’s Compensation for Detriment caused by Defective Administration (CDDA) scheme.
InvestorDaily understands Mr Francis is currently in the process of making an application to the CDDA scheme for losses sustained as a result of ASIC’s intervention of his business.
