This is a service specifically targeted at the needs of busy non-executive directors (NEDs). We aim to give you a ‘heads-up’ on the things that matter for NEDs in the week ahead – all in just a few minutes.
In this edition, we discuss the warning issued to payday lenders, legal action against FIIG Securities Limited (FIIG) for alleged cyber security lapses, market manipulation charges for ‘wash trading’ and the Takeovers Panel's decision to decline to conduct proceedings in relation to two applications from Benjamin Hornigold Ltd (ASX: BHD) (BHD).
In Over the Horizon, we discuss a keynote speech by ASIC Chair Mr Joe Longo on the nature and application of directors' duties amidst regulatory changes.
Regulatory
ASIC cautions payday lenders on potential consumer law breaches
On 13 March 2025, ASIC released a report revealing that some lenders providing small amount credit contracts (known as ‘payday loans’) may be moving vulnerable consumers into contracts with fewer protections. While the report identifies a reduction in the number of small amount credit contracts being provided, ASIC expressed concerns about lenders continuing to enter into unsuitable contracts with consumers or failing to identify an appropriate target market and distribute their products accordingly. ASIC warned that it will investigate and take action against businesses which may be attempting to avoid additional consumer protections imposed on small amount credit contracts. ASIC remains concerned by repeat lending to vulnerable consumers, which may lead to debt spirals. Companies involved in small amount credit contracts should be aware of the heightened regulatory obligations in this space and ensure they have effective monitoring and compliance systems.
Legal
ASIC commences proceedings against FIIG Securities Limited for cyber security failures
On 13 March 2025, ASIC announced that it had commenced proceedings in the Federal Court of Australia against FIIG, an Australian Financial Services licensee, for allegedly failing to implement adequate cyber risk management systems, resulting in the theft of approximately 385GB of confidential data. This is ASIC’s second cyber security enforcement action and cyber security will remain a key enforcement priority for 2025. ASIC Chair, Mr Joe Longo, emphasised that “this matter should serve as a wake-up call to all companies on the dangers of neglecting your cyber security systems”. ASIC is seeking declarations of contraventions, civil penalties and compliance orders against FIIG.
ASIC investigation leads to charges for market manipulation
On 14 March 2025, ASIC announced that the Commonwealth Director of Public Prosecutions had charged Mr Behzad Eghrari with three offences of creating a false or misleading appearance of active trading in financial products, following an ASIC investigation and referral. ASIC alleges that Mr Eghrari executed 679 'wash trades' between accounts he controlled, affecting the prices of shares in three listed companies. Wash trading involves placing buy and sell orders for the same financial product without any change in beneficial ownership, creating a false or misleading impression of market activity. The maximum penalty for the alleged offences is 15 years' imprisonment. The case illustrates the importance ASIC places on compliance with market integrity rules.
Takeovers Panel declines to conduct proceedings in relation to the affairs of Keybridge Capital Limited and the affairs of Benjamin Hornigold Ltd
On 13 March 2025, the Panel announced that it had declined to conduct proceedings on two applications from BHD – one in relation to its own affairs and the other in relation to the affairs of Keybridge Capital Limited (administrator appointed) (ASX: KBC) (KBC), which holds a 19.59% interest in BHD. BHD submitted, among other things, that:
KBC directors had taken steps to frustrate their replacement with new directors at a requisitioned meeting of shareholders
KBC director Mr Nicholas Bolton’s voting power in KBC had not been fully disclosed
there were “material undisclosed associations or concert party behaviours in relation to both [KBC] Shares and BHD Shares which [were] adversely impacting the efficient, competitive and informed market for BHD shares”.
The Panel considered that these circumstances substantially overlapped with matters in proceedings currently before the Supreme Court of New South Wales. The Panel concluded that there was no reasonable prospect that it would make a declaration of unacceptable circumstances and will publish its reasons for the decision in due course.
Over the Horizon
ASIC Chair highlights directors' duties amidst regulatory changes
On 12 March 2025, ASIC Chair Mr Joe Longo spoke at the Australian Institute of Company Directors’ Australian Governance Summit, highlighting the implications of directors' duties amidst evolving regulatory challenges. Mr Longo stressed that while directors' foundational obligations and expectations remain unchanged – acting in good faith, in the best interests of the company, for a proper purpose and with due care and diligence – the way these duties are fulfilled must adapt to a new reality shaped by a data-driven digital economy and increasing geo-political risk. Looking ahead, Mr Longo noted that ASIC had convened a Simplification Consultative Group to simplify and consolidate ASIC’s work, including its regulatory guidance, and to identify the highest priority law reforms to reduce regulatory complexity, making it easier for businesses to navigate legal obligations. However, Mr Longo also noted that “one thing that should change is thinking around board composition” – in particular, the need for “more ‘science’ [skills] in the boardroom”. It is clear that increasing technical expertise on boards – by hiring and upskilling current board members – in technology, AI and cyber security, will be crucial as these areas become more integral to business operations and risk management. Further, Mr Longo stressed that rigorous and diligent reporting between management and the board will be vital for making informed strategic decisions. NEDs in particular, should consider how these evolving dynamics will impact their governance and recruitment practices to stay ahead of the curve.