SHADOW MINISTER FOR CONSTITUTIONAL REFORM
MEMBER FOR ISAACS
STEPHEN JONES MP
SHADOW ASSISTANT TREASURER
SHADOW MINISTER FOR FINANCIAL SERVICES
MEMBER FOR WHITLAM
ASIC WARNS FRYDENBERG ATTACK ON CLASS ACTIONS COULD UNDERMINE ECONOMY
Treasurer Josh Frydenberg deliberately went against the strong advice of Australia’s corporate regulator as part of his incompetent, irrational and politically driven crackdown on class actions and litigation funding.
Continuous disclosure laws require companies to keep the market fully informed of anything that could affect their share price.
In May, following a request from the Australian Institute of Company Directors, Mr Frydenberg used his emergency Covid-19 powers to water down those laws, claiming it would protect companies from the “threat of opportunistic class actions”.
However, FOI documents obtained by The Guardian reveal Mr Frydenberg defied a clear warning from ASIC that the existing continuous disclosure regime was “a fundamental tenet of our markets and is particularly important during times of market uncertainty and volatility (eg the GFC, Covid‐19 pandemic)”.
Far from undermining business confidence, ASIC told the Treasurer in the clearest terms that Australia’s continuous disclosure regime was “working well” and operated to “increase the attractiveness of Australian markets for investors”.
And in a devastating rejection of Mr Frydenberg’s irrational “justification” for watering down the continuous disclosure regime, ASIC said that “[t]he economic significance of fair and efficient capital markets dwarfs any exposure to class action damages.”
The ASIC warning shows that, in his rush to undermine class actions, Mr Frydenberg potentially undermined the capacity of Australian companies to raise capital in the middle of a global pandemic.
This is the second time in a week Australia’s corporate regulator has called out the Morrison Government for its incompetent and politically driven crackdown on class actions and litigation funds.
Just last week ASIC revealed it was not told about the Treasurer's announcement that the Morrison Government would regulate litigation funders and plaintiffs in class actions until the night before the announcement – a move that has been consistently opposed by ASIC and Treasury.
Last week’s first hearing of the inquiry into class actions and litigation funders confirmed what Labor has been saying since day one: the Liberal Party’s assault on class actions is a shameless move towards denying justice and fair compensation to ordinary Australians.
It’s extraordinary that in the middle of an unprecedented public health and economic crisis the Morrison Government decided to launch its assault on class actions through ill-considered regulatory changes and sham inquiries.
The Australian Treasury and the Parliament should be focused on the real economic challenges facing Australians – not the weird and nasty ideological obsessions of a small number of Liberal Party ministers and backbenchers.