Australian Securities and Investments Commission v Bekier (Liability Judgment)

Practitioners advising directors and officers of regulated entities must note that executives who fail to escalate material compliance risks to the board will bear personal liability under s 180(1), but non-executive directors will not be liable where management has failed to provide them with adequate information, provided they were not on notice of specific red flags requiring further inquiry. The judgment also confirms that cascading counterfactual pleading—alleging breach based on steps a hypothetical director would have taken after obtaining information the actual director never possessed—is impermissible; the breach must crystallise at the point of the failure to inquire.