Another example of ASIC’s enforcement impotence

Unfortunately the judgement published this week in the matter of R v Amos [2024] NSWDC 687 represents another nail in the coffin containing the corpse of ASIC‘s reputation as an effective enforcer.

iNO reported in 2019 that ASIC had appointed Simon Cathro to review a batch of Amos’s files.

These days founder of Cathro & Partners Cathro at the time was both a partner at Worrells and a member of ASIC’s 15 person Reviewing Liquidator panel.

That same year Amos was hauled in for public examination by Andrew Scott and Scott Pascoe to explain why he hadn’t provided to them books and records and funds he held despite being replaced by the then PwC pair as provisional liquidators of All City Recycling.

But it wasn’t until April 2022 that ASIC instructed Amos to refrain from accepting any further EXADs.

This was despite ARITA reporting concerns to ASIC in respect of the non-lodgement of forms in October 2021.

And in February 2023 iNO first reported that Amos was being investigated in respect of up to $3 million in funds missing from liquidation accounts.

This sum was not far removed from the $2.5 million Amos ultimately confessed to misappropriating in the 2023 agreed statement of facts which formed the basis of District court judge Robyn Tupman’s determination in December 2024 that a term of at least two year’s imprisonment was warranted.

ASIC lacks the resources to monitor conduct in real time and there are good reasons why such a level of scrutiny would create more problems than it solved.

But taking months to act after warnings from the peak professional body for insolvency practitioners cannot be a question of resource deficiency alone.

ARITA reported the concerns about Amos’s conduct almost two years after ASIC itself appointed Cathro to review Amos’s file.

Whatever the outcome of Cathro’s review, ASIC must have had pre-existing concerns. Perhaps it was alive to the fact that early in his career Amos spent more than a year working at ASIC, working on liquidator cases brought before the Company Auditors and Liquidators Disciplinary Board and with the National Insolvency Coordination Unit.

Amos had inside knowledge of how the regulator functioned. He left ASIC in August 2005 and became a registered liquidator on 11 May 2006.

And then there’s ASIC’s record, which in terms of cases it brings to court is abysmal.

In 2019 its pursuit of former liquidator Andrew Wily and David Hurst was described as “vexatious” by NSW Supreme Court judge Paul Brereton, who went on to dismiss ASIC’s application for a judicial inquiry and ordered the regulator to pay Wily and Hursts’ costs.

Then there was West Australia Supreme Court judge Kenneth Martin who in December 2021 described ASIC’s bid for orders slashing the fees of KPMG partners Martin Jones and Andrew Smith as “unprincipled” and “wholly pointless”.

The problem with a record of consistent failure is not that it makes ASIC cautious and gun shy about acting.

It’s that a deficiency of resources undermines ASIC’s ability to attract the talent it needs to undertake effective and timely investigations, rehabilitate its reputation and win most of the cases it runs.