Rational actors in the financial services market will routinely take risks and flaunt the law when they believe "the penalty available to respond to misconduct is much less than the profit," Greg Medcraft, chair of the Australian Securities and Investments Commission told a Senate inquiry yesterday.Medcraft told the inquiry: "There is an expectation among the public that we will take strong action against wrongdoers - and doing this will send a message that shapes future behaviour. "However, one of the barriers we face to achieving this is the inadequacy of penalties."He said ASIC "requires a more graduated set of penalties to provide an effective enforcement response in a wider range of cases.'"We consider that this includes the greater availability of infringement notice powers. "It is frustrating - both for us and the public - when the penalty available to respond to misconduct is much less than the profit someone made in the process. "If this is so, then rational players in the market will routinely take that risk. "If the thinking of law-breakers is a tussle between fear versus greed, then we need penalties that amplify the fear and smother the greed. "We need penalties that create a fear that overcomes any desire to take risks and break the law."