ASTC Settlement Rules Guidance Note 03 - Disciplinary Proceedings by DanPaulli

VIEWS: 14 PAGES: 8

									                                   ASTC Settlement Rules
                                                 Guidance Note No. 3

KEY TOPICS                  DISCIPLINARY PROCEEDINGS
1. Disciplinary
   Obligations and Powers   Purpose
2. Disciplinary & Appeals
   Tribunal
                            This Guidance Note outlines for the benefit of Facility Users and their
3. Expedited Disciplinary
                            advisers the practices and procedures followed by ASTC when it takes
   Proceedings
                            disciplinary action under the Settlement Rules in relation to a Facility User.
4. Disciplinary Powers
5. Publication of
   Determinations           This Guidance Note does not address ASTC’s practices and procedures in
6. Reporting to ASIC        relation to conducting an investigation under the Settlement Rules,
                            concerning a Facility User, which may lead to disciplinary proceedings. That
                            topic is addressed in a separate Guidance Note titled ‘ASTC Investigations’.
ASTC Settlement
Rules                       ASTC has published this Guidance Note to promote commercial certainty and
1. Section 12               to assist Facility Users. Nothing in this note necessarily binds ASTC in the
                            application of the Rules in a particular case. Nor does anything in this note
                            bind the Disciplinary Tribunal or the Appeal Tribunal or restrict either
Cross-reference             Tribunal in adopting such practices and procedures as each considers
1. s 821A Corps Act         appropriate in its discretion from time to time. In issuing this note, ASTC is
2. s 822B Corps Act         not providing legal advice and Facility Users should obtain their own advice
                            from a qualified professional person in respect of their obligations.
3. ASTC Guidance Note
   No. 06 – Issue of
   Management Letters
4. ASTC Guidance Note       ASTC Disciplinary Obligations and Powers
   No. 09 – Monitoring
   Compliance -
   Investigations           ASTC is obliged by Section 821A of the Corporations Act to, among other
                            things:-
                               • do all things necessary to ensure that its services are provided in a fair
Guidance Note                    and effective way;
History                        • have adequate supervisory arrangements ; and
Amended:                       • have adequate arrangements for enforcing compliance with its
01 November 2006                 operating rules.

Introduced:
11 March 2004               By Section 822B of the Corporations Act, ASTC’s Settlement Rules have
Introduction of New Rule    effect as a contract between ASTC and its Facility Users, under which all
Book                        parties agree to observe and perform the provisions of the Settlement Rules
                            which apply to them.

                            ASTC has included in the Settlement Rules arrangements for taking
                            disciplinary action concerning Facility Users.


                               GN 3 – Disciplinary Proceedings
                               01 November 2006                                                Page 1 of 8
Settlement Rules – Overview
Section 12 (“Supervision and Disciplinary Matters, Tribunal Proceedings and Appeals”) of the
Settlement Rules set out the formal arrangements ASTC has put in place in relation to the conduct of
disciplinary proceedings which ASTC may commence in relation to Facility Users .

Rule 12.4 sets out details of the disciplinary action ASTC may take in respect of a breach of the
Settlement Rules or Procedures.


ASTC Disciplinary and Appeal Tribunals
Contravention Notices and the Disciplinary Tribunal

By Rule 12.4.6, where ASTC considers that a Facility User has breached any of the Settlement Rules or
Procedures, it may commence disciplinary proceedings against the person concerned by giving that
person a written Contravention Notice.

A Contravention Notice issued against a Facility User under Rule 12.4.6 is heard by the Disciplinary
Tribunal. The Facility User is entitled to be heard in answer to the Contravention Notice.

The Disciplinary Tribunal is a “peer” tribunal comprising 3 persons chosen by the chairperson of the
Disciplinary Tribunal (or in that person’s absence the deputy chairperson) from a Tribunal Panel of not
less than 10 persons (see Rules 12.10.1 and 12.11.4).

Where the Disciplinary Tribunal finds that a Contravention Notice, or part thereof is proven, it may
impose a variety of sanctions. By Rule 12.4.8, the Disciplinary Tribunal may

• impose a censure; or

• impose a fine of up to $250,000; and/or

• suspend the Participant for no longer than 1 year

• require a Participant to institute or upgrade an education and compliance programme; and/or

• direct ASTC to publish information concerning the contravention and the penalty imposed; and/or

• impose restrictions on the Participant’s participation in the Settlement Facility for no longer than 1
  year; and/or

• if ASTC or a Participant has suffered any reasonably foreseeable loss or damage, direct the Issuer to
  pay to ASTC or the Participant (as appropriate) an amount not exceeding that loss or damage; and/or

• if the Participant is a Clearing Participant, direct ATSC to give notice of the contravention and any
  penalty imposed or direction given to an Approved Clearing Facility and each Market Participant and

                           GN 3 – Disciplinary Proceedings
                           01 November 2006                                               Page 2 of 8
   Settlement Participant with whom the Participant has entered into a Clearing Agreement or a
   Settlement Agreement.

Appeals

A Facility User may appeal (see Rule 12.5.1) to the Appeal Tribunal from a determination made by the
Disciplinary Tribunal under Rule12.4.8. ASTC may also appeal to the Appeal Tribunal if it is
dissatisfied with a determination made or a sanction imposed by the Disciplinary Tribunal (Rule12.5.1).
The Appeal Tribunal comprises a chairperson (or deputy chairperson if any), who shall be a retired
judge or a barrister or solicitor and 2 other persons selected by the chairperson (or the deputy
chairperson) from the Tribunal Panel (Rules 12.13.3 and 12.13.4). Notice of an appeal must be
received by ASTC within 10 Business Days after receipt of the written reasons for the decision appealed
against (Rule12.12.1). There is no standard form of notice of appeal, but the usual practice is to refer to
the determination of the Disciplinary Tribunal, state which part or parts of that determination is
appealed from and specify the grounds of appeal, in particular how the Disciplinary Tribunal is said to
have erred and what determination ought to have been made by the Disciplinary Tribunal.


Expedited Disciplinary Proceedings
For less serious alleged breaches of the Rules or Procedures the Disciplinary Tribunal may determine a
matter by considering only a report (see the Guidance Note titled “ASTC Investigations”), without a
written contravention notice and without the parties or their legal representatives being present. This is
referred to as an expedited proceeding. See Rule 12.4.2. The sanctions which the Disciplinary Tribunal
may impose under an expedited proceeding are limited to a fine of up to $20,000 for each
contravention, directing an Issuer to pay to ASTC or a Participant (as applicable) any loss or damage
suffered as a result of an Issuer’s contravention, or imposing a censure. A Facility User which is
dissatisfied with the outcome may, within 10 Business Days of notification of a determination, require
the matter to be heard by the Disciplinary Tribunal under Rule 12.4.6 referred to above.


ASTC Disciplinary Procedures
Set out below is a description of practices and procedures which ASTC commonly follows when it
commences and pursues disciplinary action under the Rules. Many of these procedures are not formal
rules. Facility Users should note that the procedures which ASTC adopts in a particular case may vary
from these procedures where appropriate, depending on all the relevant circumstances.


Contravention Notices
The decision as to whether to issue a Contravention Notice under Rule 12.4.6 is made by a member of
senior management, pursuant to a delegation from the Board of Directors.

If a decision is made to issue a Contravention Notice, a copy will be given to the Facility User and to the
Disciplinary Tribunal, which will specify the rule or procedure breach which is alleged to have occurred,
together with particulars of the facts which it is alleged give rise to the alleged breach.

                           GN 3 – Disciplinary Proceedings
                           01 November 2006                                                Page 3 of 8
In addition to the Contravention Notice, a copy of any report and any attached documents will also be
provided to the Facility User and to the Disciplinary Tribunal.


Disciplinary Tribunal Communications and Directions
Following the issuing of a Contravention Notice to a Facility User, the chairperson of the Disciplinary
Tribunal or Counsel to the Disciplinary Tribunal (being a person appointed to assist the Disciplinary
Tribunal in carrying out its functions) will advise the Facility User and ASTC in writing of the date fixed
for the hearing. The chairperson of the Disciplinary Tribunal or Counsel to the Disciplinary Tribunal
will also advise the parties of the identity of the 3 persons who have been selected to hear the matter.

Communications to the Disciplinary Tribunal prior to a hearing should be addressed to Counsel to the
Disciplinary Tribunal, and should always be copied to the other party.

If any party has any objection to any member of the Disciplinary Tribunal hearing a particular matter or
has any other objection to a particular matter being heard by the Disciplinary Tribunal, that party should
raise that objection at the earliest possible opportunity with Counsel to the Disciplinary Tribunal and
should not wait until the hearing date before raising the objection.

Prior to a hearing, the Disciplinary Tribunal may give written directions to the parties, with a view to
simplifying the matter and shortening the hearing time. Pre-hearing directions given by the Disciplinary
Tribunal may address such matters as imposing deadlines for the supply to the other party of copies of
documents which it is intended will be relied on at the hearing, imposing deadlines for identifying any
persons who it is proposed will give oral evidence at the hearing, directing that written outlines of
arguments be prepared and directions in relation to preparing a statement of agreed facts.

The above procedures apply equally before the Appeal Tribunal, except that the references to Counsel
to the Disciplinary Tribunal should be read as references to Counsel to the Appeal Tribunal (being a
person appointed to assist the Appeal Tribunal).


Electing to Refrain from Contesting a Contravention Notice
After receiving a written Contravention Notice, a Facility User should give consideration to whether it
intends to contest the matters at a hearing. Some of the factors which could have a bearing on that
decision may include whether the Facility User accepts that it has contravened the Settlement Rules or
Procedures, the weight of the evidence, the wording of the relevant Rules and Procedures and the
expense and time involved in preparing for and attending a contested hearing. The Facility User may
choose to consult with its professional advisers when giving consideration to these matters.

If a Facility User is interested in possibly refraining from contesting a Contravention Notice, it should
contact ASX Enforcement as soon as possible to discuss the matter. Discussions with ASX Enforcement
may be held on a “without prejudice” basis, such that the matters discussed will remain confidential and

                           GN 3 – Disciplinary Proceedings
                           01 November 2006                                                Page 4 of 8
will not be used in evidence against the Facility User before the Disciplinary Tribunal without the
Facility User’s consent.

Where a Facility User agrees with ASTC that it will not contest a Contravention Notice, it may also seek
to agree with ASTC a submission to the Disciplinary Tribunal in relation to the sanction or sanctions it
would be appropriate for the Disciplinary Tribunal to impose and, where the sanction involves a fine or
a payment of commission or profit, the amount of that sanction. That submission may be made to the
Disciplinary Tribunal in writing, in the form of a letter from the Facility User. The Facility User will
usually consult with ASX Enforcement regarding the form and content of such a submission.

Where a Facility User elects not to contest part or all of a Contravention Notice, the Disciplinary
Tribunal must nevertheless be satisfied, having regard to the available evidence, that the issues alleged in
the Contravention Notice are made out, before it will make a finding that a breach of the Rules or
Procedures has occurred. In considering the evidence when no contested hearing takes place, the
Disciplinary Tribunal will have regard to any documents placed before it by ASTC and by the Facility
User, including any report. The Disciplinary Tribunal may also in its discretion require ASTC and the
Facility User to appear before it to provide further information or clarify any issue raised by the
documents.

The Disciplinary Tribunal is not obliged to adopt a common submission from ASTC and the Facility
User as to the appropriate sanction to impose where an uncontested matter is found to have been made
out on the evidence. The Disciplinary Tribunal may impose a greater or lesser sanction than that
submitted by the parties if it thinks fit. However, where a matter is uncontested, the parties’ entitlement
to appeal from the Disciplinary Tribunal’s determination as to the sanction to be imposed, is preserved.


Contested Hearings
Where a Contravention Notice is contested, a hearing will take place before the Disciplinary Tribunal
and, in the event of an appeal, before the Appeal Tribunal, on a date nominated by the Disciplinary
Tribunal (Rule 12.11.5), and where relevant, by the Chairperson or Deputy Chairperson of the Appeal
Tribunal (Rule 12.13.5), by notice in writing to the parties. For Disciplinary Tribunal hearings, the
hearing date must be not less than 5 Business Days after the notice is received by the Facility User (Rule
12.11.5) and for Appeal Tribunal hearings it must be not less than 15 Business Days after the date of the
notice (Rule 12.13.5).

Rule 12.14.3 provides that proceedings of the Disciplinary Tribunal and the Appeal Tribunal shall be
conducted with as little formality and technicality, and with as much expedition, as a proper
consideration of the matters before the relevant tribunal permit. While both the Disciplinary Tribunal
and the Appeal Tribunal do not operate as a court, some court practices or procedures may be adopted
by the Tribunals in hearings, for example, setting time-tables for the submission of material to the
Tribunal and other parties.

The venue for a hearing is chosen by the relevant tribunal. The venue is often ASTC’s premises in the
home state of the Facility User. Alternatively, the Disciplinary Tribunal or the Appeal Tribunal may
choose to hold a hearing by video or telephone conference.

                            GN 3 – Disciplinary Proceedings
                            01 November 2006                                                Page 5 of 8
If the Facility User does not want to appear in person or be represented before the Disciplinary Tribunal
or Appeal Tribunal, it may lodge a written submission for consideration by the relevant tribunal. The
submission must be lodged not less than 5 Business Days before the date of the hearing (Rule 12.14.2).

Hearings before the Disciplinary Tribunal and the Appeal Tribunal take place in private. However, 2
representatives of each of the Facility User and ASTC are entitled to be present and to make submissions
(Rule 12.14.1). The relevant tribunal may also permit more than 2 representatives to be present. A
representative may be a member or employee of the party appearing before the tribunal, or a barrister or
solicitor or any other person approved by the tribunal (Rule 12.14.1).

At the commencement of a hearing, it is customary for the chairperson to:

• identify the members of the tribunal;
• request the parties and their representatives to identify themselves and in the course of doing so,
  draw to the parties attention that (if relevant) the proceedings are being recorded
• ascertain whether there are any procedural objections, not previously raised, to the convening of the
  hearing or the composition of the tribunal; and
• ascertain whether the Facility User continues to contest the Contravention Notice.

Once it has ascertained that the Contravention Notice continues to be contested, the tribunal will invite
ASTC to put before it the evidence upon which ASTC relies in support of the Contravention Notice and
to address the tribunal in relation to thereto. After ASTC has presented its evidence and made its
address, the tribunal will invite the Facility User to present its evidence and to address the tribunal in
relation to the Contravention Notice. After the Facility User has completed its address, the tribunal will
afford ASTC an opportunity to address the tribunal in reply.

The tribunal will also invite the parties to address it on the question of any sanction which it would be
appropriate to impose, in the event that it finds that the Rules or Procedures have been contravened. It
may call for addresses to be made on the question of sanctions as part of the submissions in support of
or in opposition to the Contravention Notice, or it may ask that those submissions be made if and when
it makes a finding that a contravention of the Rules or Procedures has occurred. If the latter, the same
order of addresses will apply as for addresses in support of or in opposition to the Contravention
Notice.

A tribunal must determine a matter without bias and give both ASTC and the Facility User a fair hearing
and observe the rules of procedural fairness (Rule 12.14.4).

Apart from the obligation to observe the requirements of Rule 12.14, the Disciplinary Tribunal and the
Appeal Tribunal may conduct proceedings as they see fit (Rule 12.14.3). Neither tribunal is obliged to
observe formal rules of evidence and may give such weight to items of evidence placed before it as it
considers appropriate and fair in all the circumstances. Evidence placed before the Disciplinary Tribunal
and the Appeal Tribunal by ASTC and by the Facility User is commonly in written form, supported by
oral submissions made by the parties. The written evidence commonly includes a report and business
records of the Facility User. The Disciplinary Tribunal, and the Appeal Tribunal where relevant, may

                           GN 3 – Disciplinary Proceedings
                           01 November 2006                                               Page 6 of 8
permit oral evidence to be led before them. It is a matter for the relevant tribunal’s discretion whether
to permit a person who provides oral evidence to be cross-examined. The relevant tribunal may itself
choose to question a person who provides oral evidence.

The Disciplinary Tribunal and the Appeal Tribunal are not obliged to make a transcript of a hearing but
may elect to do so (Rule 12.14.3). The usual practice is that the hearing is recorded and the relevant
tribunal subsequently makes a decision on whether to prepare a transcript from the recording. Any
transcript made is required to be copied to the Facility User who is the subject of the hearing as well as
to ASTC (Rule 12.14.3).

A determination of the Disciplinary Tribunal or the Appeal Tribunal is made by a simple majority of
votes of the 3 members of the relevant tribunal. Each member, including the chairperson, has one vote.
The chairperson does not have a casting vote (Rule 12.14.5).

The relevant tribunal may make its determination immediately after the conclusion of submissions made
to it by the parties or it may reserve its decision to a later date. In either case, the Disciplinary Tribunal
and the Appeal Tribunal are each obliged to provide written reasons for their determinations within 30
Business Days after the determination is made (Rule 12.11.7 and Rule 12.13.10).

The Rules contain provisions whereby the Appeal Tribunal can award costs, as follows:-

if it considers that a party to the appeal, or to the proceedings the subject of the appeal, has acted
vexatiously, frivolously or unreasonably, the Appeal Tribunal may order that party to pay to another
party to the proceedings, the whole or part of the costs and expenses incurred by the other party (Rule
12.13.7), and/or

if it considers that a decision of the Disciplinary Tribunal is unreasonable, the Appeal Tribunal may
order ASTC to pay to another party to the proceedings, the whole or part of the costs and expense
incurred by the other party (Rule 12.13.8).


Publication of Disciplinary Tribunal and Appeal Tribunal Determinations
Rule 12.6.4 provides that where ASTC is directed by the Disciplinary Tribunal under Rule 12.4.8(b) to
publish information – ASTC may in its discretion decide in what form and manner the publication
should be made. The usual practice is for an announcement, including a summary of relevant
circumstances, to be published in a circular under the heading "Disciplinary Matters".

In addition, where a Facility User has been determined to have contravened the Rules or Procedures
ASTC records details of the determination in a register (Rule 12.6.1). The register is available for public
inspection during business hours by appointment.




                            GN 3 – Disciplinary Proceedings
                            01 November 2006                                                  Page 7 of 8
Report to Australian Securities and Investments Commission
If the Disciplinary Tribunal, and where relevant the Appeal Tribunal, takes disciplinary action against a
Facility User, ASTC is obliged by Section 821B(2) of the Corporations Act to lodge with ASIC written
particulars of the name of the Facility User, the reason for and nature of the action taken.


Qualification

ASTC has published this note to promote commercial certainty, and assist Participants. Nothing in this
note necessarily binds ASTC in the application of the Rules in a particular case. In issuing this note
ASTC is not providing legal advice and Participants should obtain their own advice from a qualified
processional person in respect of their obligations. ASTC may replace this Guidance Note at any time.
Readers may contact ASTC to ensure they have the latest version




                           GN 3 – Disciplinary Proceedings
                           01 November 2006                                               Page 8 of 8

								
To top