Public and private enforcement of securities laws in Australia: an examination of the continuous disclosure regime

Abstract

Continuous disclosure is an approach to securities regulation that mandates relevant regulated entities promptly disclose material information to the securities market on a continuing basis. The aim of continuous disclosure is to enhance the integrity and efficiency of capital markets by ensuring that the market is fully informed, and to promote investor protection.

Australia has traditionally relied on a public regulator, the Australian Securities and Investments Commission (ASIC), to enforce its securities laws, and since 1994, the enforcement of its continuous disclosure regime. However, shareholder class actions whereby private litigants pursue claims for contravention of the continuous disclosure regime, have become a growing phenomenon in the Australian legal landscape. The advent of the shareholder class action has given rise to overlapping enforcement of the continuous disclosure laws by the public regulator and private citizens. The above developments have motivated two main questions for examination in this thesis.

The first question is to inquire as to the effectiveness of ASIC enforcement and the shareholder class action, vis-à-vis each other, in achieving deterrence and compensation in relation to the continuous disclosure regime. The focus on deterrence and compensation is chosen because these are the areas where ASIC and the class action overlap. As the thesis is interested in the co-existence of ASIC enforcement and the shareholder class action, the approach to effectiveness is comparative rather than absolute.

The second question asks what the ramifications are of ASIC enforcement and shareholder class actions co-existing in relation to the continuous disclosure regime from the perspective of regulatory process and the values of a ‘good’ regulatory process. The values identified are: (1) legislative authority, (2) the public interest, (3) accountability, and (4) efficiency. The consideration of the regulatory process is necessary to determine if desirable regulatory values are complied with or promoted by ASIC enforcement and the class action. Moreover, consideration is given to how action by ASIC and the class action may impact each other, that is, whether they help or hinder each other.

In summary, the first question focuses on outcomes, namely deterrence and compensation. The second question focuses on process and process values.

The answers to these questions are pursued through the development of an analytical framework and the use of case studies. The development of an analytical framework and the empirical work done to compile the case studies are the original contributions to knowledge made by this thesis. The thesis presents a multi-dimensional understanding of deterrence, compensation and regulatory process; these are explored through the detail and nuance of the in-depth case studies, including interviews with participants. The thesis does not seek to give a single answer to each of the research questions, but rather to produce a sophisticated account of the various factors that interact and mediate both outcomes and processes, so as to demonstrate that any answer is complex and contingent on a number of influences and circumstances.