The role of the Chief Executive Officer is vital across all the internal and external processes of the company. He is ultimately responsible for the firm’s growth and failure as well as compliance and non-compliance to certain government regulations. Unfortunately for some, this is a lesson learned the hard way; but a lesson learned nonetheless.
Today, we review the Murray Priestley ASIC experiences, a CEO of a lifestyle firm who got involved in a web of controversies resulting in an ASIC ban for three years. Such ban ended 2 June 2016.
The 3-Year Ban: A Closer Look
In June 2013, Australian corporate regulator, ASIC, released an incomplete press release announcing the ban of then CEO Murray Priestley from delivering financial services to Australia retail clients only.
What’s missing from the press release was the exact and factual explanation of the decision. Murray Priestley and his legal team were given a copy of the decision and a portion of which reads:
A close examination of the above scanned statement would reveal a key decision point: the failure to critically consider the operations of the Elite Program.
What Went Wrong?
- An Insufficient Transition
A CEO is supposed to be knowledgeable in all areas of operations, especially in the product that’s being put forward. The reason is because he is ultimately responsible for every transaction and even every word that any employee of the company would say while in the conduct of his/her duties and responsibilities.
When Murray Priestley was hired as a CEO for the lifestyle company, it was already in operation for a few years. Unfortunately, the transition from the previous CEO to him has left some holes in operations and management.
Why was the essence of the software being sold by the company kept hidden from the CEO? The answer remains uncertain to this date. What was certain, though, was that Murray Priestley was assured that the calculations used in the software were not based on moving averages. In effect, the complete operations failed. ASIC found that it has resulted to misleading statements provided to the clients.
- What Worked Before Should Still Work In The Future
It’s common human nature to trust in the things and processes that worked before. If they did, then there shouldn’t be any reason to question their effectiveness now and in future, correct? It’s the same thought that ran through Murray Priestley’s mind when he was hired to take over a mid-size company with 52 employees.
He didn’t question whether the staff has been trained and if they were trained correctly and sufficiently. He didn’t question the then ongoing system of reviewing marketing materials for Financial Legislation compliance prior to distribution. There were, after all, hired internal and external staff who have been on the job longer than he was.
Unbeknownst to him, his employees have been sending conflicting and confusing information to their clients. As CEO, ASIC held him ultimately responsible for ALL email content sent by ANY staff member to ANY client.
Was It Political?
Murray Priestley believes that ASIC has the right to investigate and prosecute individuals and companies who operate outside of the legislation granted that these are performed in an open and transparent manner. What happened to him did not reflect this.
The entire fiasco began when an an ex-Director and partner of the Chairman produced a “whistle-blower” document that contained completely fabricated, defamatory and non-factual accusations. Although this was latter proven as false, it has started ASIC on a path of trying to dig up whatever it could on the company and the Chairman.
In the conduct of their supposed investigation, ASIC reportedly bullied and harassed potential witnesses to testifying against Chairman and the company, including then CEO Murray Priestley. Although nothing was proven yet at that time, the company has already begun to lose clients and revenue because of the way the investigation was carried out. It was made a trial by publicity instead of it being an internal affair.
There was even a specific forum website that has a few pages of defamatory commentary about the last days of the Lifestyle business. All of which are posted by anonymous persons – but with certain information that would only be known by ex-staff.
To Murray Priestley, the way that ASIC went about trying to investigate is not what he’d consider fair, open or transparent
Lessons Learned: From a CEO Perspective
None of the above issues could have risen if there were certain measures in place. FAQ pages, websites and other relevant materials that would explain the business would have been made accessible to the public.
A thorough review of the existing processes and guidelines should have been made prior to a take-over. This is especially true when running a company that’s operating under government regulation such as financial services, health and any other publicly listed company.
Here is a video overview to learn more about ASIC.