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Ever wondered how often ASIC successfully takes a legal action in the world of Liquidations?

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ASIC takes a variety of legal actions against Directors, Auditors and Liquidators.  ASIC recently published a Report entitled “ASIC Enforcement Outcomes July to December 2013”.  The actions I am interested in are for Director Banning, Insolvent Trading, failure to keep adequate books & records or breach of director’s duties.  As per past reports, this Report reveals a relatively low level of prosecution.

Here are some relevant statistics so you can understand the big picture of the insolvency world:

  • There were about 10,000 liquidations and so about 10,000 reports by Liquidators to ASIC each year – so in the relevant period there are about 5,000 of each.
  • Liquidators traditionally report offences of some sort in about 70% of liquidations, so that would be in about 3,500 cases.

So how often were there “Enforcement Outcomes”, being finalised actions?  Drum roll please…….ASIC reports the following outcomes:

  •  7 criminal actions against directors;
  • 176 actions against directors for failure to assist a Liquidator in their enquiries;
  • 32 Director Disqualifications;
  • 4 actions against Liquidators.

Total actions in the insolvency world….219.  Not a big number when compared to the 3,500 possible actions.

Of course, there were a great many more prosecutions by ASIC in its other areas of interest such as Market Manipulation, Unlicensed Conduct and Continuous Disclosure.

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