TORONTO, July 1, 2021 /PRNewswire/ — The below is a statement released on behalf of Daniel Schlaepfer following today’s verdict on his appeal.
Mr. Schlaepfer is pleased that ASIC’s truth defence has been struck down, rejecting the finding that Select Vantage Inc. (SVI) traders had engaged in market manipulation.
The judgment concluded that: “Although Mr Schlaepfer has been unsuccessful in the outcome of the appeal, he has been successful on most issues including the defence of truth, which occupied a substantial portion of the proceedings. That success has achieved what was said to be an important outcome of the appeal, namely, the vindication of Mr. Schlaepfer’s reputation. Although ASIC has succeeded in establishing the defence of qualified privilege at common law, that is a defence of confession and avoidance. To put the matter another way, Mr Schlaepfer has established in the appeal that he was defamed, but defensibly so.” (p. 135)
Mr. Schlaepfer stated further: “We are glad that this lengthy process has come to a conclusion. Suing powerful regulators for inappropriate conduct is not an endeavour one enters into lightly. We felt forced to do so in light of what we perceived to be unfair behaviour by ASIC. The success of our case upholds some important precepts surrounding transparency and accountability in financial regulation – market participants shouldn’t have to suffer reputational damage as a result of unfounded hearsay. Sometimes the concerns of regulators are simply misunderstandings – these issues should be raised with firms directly, who should then be provided with the opportunity to explain their behaviour. If the regulator isn’t satisfied with the explanation, they can always open a formal investigation.”
“However the fact that ASIC’s defence of qualified privilege was upheld is worrying and could set a dangerous precedent for financial regulation. This demonstrates that regulators can act with impunity in causing significant reputational damage resulting in material financial losses to market participants through the communication of unsubstantiated hearsay. Moreover, they can do so without informing the market participants in question, and without providing them with an opportunity to explain their behaviour before such communications are made.”