In a case which some have called a "landmark,” the Australian Securities and Investments Commission (ASIC) put directors and executives on notice that they will be held personally accountable for wrongdoing at the firms they oversee. Alleging that they had failed to exercise statutory duties of care and diligence at crucial board meetings, ASIC filed a civil suit against 11 officials from casino operator Star Entertainment.
The regulator is seeking declarations, disqualification orders, and penalties, which could imply a maximum fine of $1.05 million per breach. According to ASIC chairman Joe Longo, the Federal Court case is a "landmark" for directors because it argues that boards should be aware of “foreseeable” risks — a term likely to receive much attention going forward as boards and officers seek to establish which of the many risks for which they are responsible qualify as being “foreseeable” in the regulator’s assessment.
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