Market misconduct penalty remains unchanged

The federal government has backed down from their earlier plans to increase market misconduct penalties by five folds, deciding that he penalty would remain at the current rate.

Corporate Law Minister Chris Bowen stated that the current penalty, which stands at $1 million for corporations and individuals who break trading laws, is still at an appropriate level.

He also maintained that there is no evidence to suggest that the current penalty rate is inadequate, and that the current penalty charges have only been implementing for a short period.

Bowen in December had initiated plans to increase the penalty rate to $5 million for market misconduct.

The turn of events is a result of intense lobbying by stockbrokers, urging the government to keep the penalty at the existing rate.

On Wednesday, the legislative powers for market regulation will be transferred from the Australian Securities Exchange to the Australian Securities and Investment Commission (ASIC).

Under the new legislation, corporations and individuals who co-operate with ASIC will be handed lower penalties, at a discount rate believed to be 60 per cent of the maximum punishment, in contrary for the earlier plans of implementing a 80 per cent rate.

Bowen said that the discount rate is being implemented in order to provide incentive for market lawbreakers to enter into arrangements with ASIC, and thus avoid civil proceedings.