ASIC has released Information Sheet 204 Recovery of investigation expenses and costs (INFO 204) which sets out its power to recover expenses and costs of its investigations and a change in its approach to exercising that power.
Under section 91 of the Australian Securities and Investments Commission Act 2001, ASIC may make an order to recover its investigation expenses and costs if, as a result of its investigation:
•a person is convicted of an offence, or
•judgment is awarded, or a declaration or other order is made against a person in a proceeding in a court.
ASIC has a similar power to recover the expenses and costs of its investigations under section 319 of the National Consumer Credit Protection Act 2009.
It will not apply when an Enforceable Undertaking is given.
This power allows ASIC to make an order to recover investigation expenses and costs, including, for example:
- salary costs for ASIC staff who have worked on the investigation
- travel expenses when we have needed to interview witnesses
- the cost of external legal counsel
- the cost of employing an expert to perform an analysis.
Investigation expenses and costs are not the same as litigation costs that may be awarded by a court.
To date, ASIC has rarely recovered its investigation expenses and costs. However, ASIC has reviewed its approach and considers that it should more frequently seek to recover the expenses and costs of an investigation from the person who has caused those expenses and costs to be incurred. Accordingly, ASIC will consider making an order for the recovery of its investigation expenses and costs in each case where the legislative requirements are met.
The new approach will apply to investigations from 29 July 2015 as well as some investigations commenced before this date.
ASIC will consider all the circumstances of a case in deciding whether to make an order to recover its investigation expenses and costs and, if so, the amount of the order. The factors ASIC will consider include:
- Impecuniosity of the person
- Exceptional hardship to the person
- The amount recoverable under an order (compared to the cost of obtaining the order)
- Extent of ASIC’s success in the proceedings
- Likely effect on victims
- Degree of culpability
- Degree of cooperation
- Scope of the investigation
