Law Council fires warning shot at ASIC’s Crennan

The Law Council of Australia (LCA) has fired a shot across the bows of the Australian Securities and Investments Commission (ASIC) suggesting comments attributed to its deputy chairman and Queens Counsel, Daniel Crennan exceed the regulator’s brief.

As the regulator seeks to pursue a tougher approach to litigation, the LCA warned that the statements attributed to Crennan in a newspaper article regarding client legal privilege and the conduct of litigation were “extremely concerning, particularly in the light of ASIC’s status as a model litigant”

Crennan had been quoted in the newspaper article as suggesting that financial services should not be in the business of pursuing prolonged legal defences only to settle at the last minute.

The LCA statement said the potential consequences for a person faced with criminal or civil proceedings brought by ASIC were extremely serious, including loss of their liberty or their livelihood.

“There is a presumption of innocence,” it said. “It is entirely appropriate for any defendant to rely on the rights and protections developed over centuries to ensure the proceedings ASIC is bringing against them are conducted fairly.”

The Law Council statement said it was concerning that ASIC as the regulator would make such statements “as there is a real risk these may put undue pressure on parties not to contest proceedings or raise legitimate issues for determination by a Court”

“Our Courts have led the way in case management and are well equipped to deal with time- wasting tactics and unreasonable rejections of settlements. They have, and use, mechanisms to ensure that matters are resolved as justly, quickly and cheaply as possible consistent with respecting the parties’ legal rights,” it said.

“If ASIC believes there are concerns in a particular case about the conduct of the litigation, the appropriate person for ASIC to raise these concerns with is the judicial officer conducting the matter, not by making broad statements to the media which may be read as veiled threats to litigants and business.”

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yep, the system is crumbling. Even hundreds of years of legal etiquette is being disrupted.

Mr Moses seems out of touch and does not get it.

Depending on the facts, there are situations where a litigation tactic is within the technical letter of the law, but is problematic from a legal ethics standpoint. In addition, ASIC validly refer to blanket claims or legal professional privilege being made to obstruct due process. Again, a lawyer may be in trouble from an ethical point of view when advising a client to make an unreasonable claim of privilege. In some cases, a blanket claim of privilege may fail to satisfy the legal tests of legal professional privilege and, as a result, will be partial or fully invalid.

One can understand Mr Crennan making bold statements about ASIC's regulatory intent in the early weeks of his position. However, he has been in the job for nearly a year now and rarely does a week go by when he does not make a strident comment at a public event about ASIC's regulatory approach. These repeated statements have continued for too long and often seem to be gratuitous. ASIC's senior leadership should have pulled back on these strong statements of intent a while ago and let their results speak for themselves. A problem with Mr Crennan's frequent grandstanding is that, unless ASIC delivers results or otherwise performs well in a way that is readily apparent to the public, his comments appear to be hollow. The question of whether ASIC would pursue the directors of CPA Australia who agreed to a 3-year termination payment for Alex Malley (see last week's article in the AFR) was a litmus test for ASIC's senior leadership. The decision to not pursue the matter does not live up to the grand claims of Mr Crennan.

As always, it is easy for one to talk big. Ultimately, one's conduct is what really matters.

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