The power of the Australian Securities and Investments Commission to accept enforceable undertakings : aims and current practices

The enforceable undertaking is one of the many sanctions available to the Australian Securities and Investments Commission (“ASIC”). An enforceable undertaking is a promise enforceable in court. The alleged offender, known as the promisor, promises the regulator to do or not to do certain actions. The result achieved by the enforceable undertaking reflects the compromise that is agreed on by the parties involved. This sanction is widely used in the regulatory community for it allows regulators to reach plausible solutions to alleged offences without unduly spending the resources of their agencies or those of the courts. This article looks at the use of enforceable undertakings by ASIC. It observes the instances under which ASIC enters into an enforceable undertaking and the alleged offences that lead to the acceptance of an enforceable undertaking. The article also surveys the promises given in an enforceable undertaking and the goals that may be achieved by these promises. Finally, this article reflects on the action that may be taken by ASIC if an enforceable undertaking is not complied with. This article also considers the origins of the sanction and takes into account the enforceable undertakings accepted by ASIC from 1998 (the date this sanction became available to this regulator) to June 2007