THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.10 - THE NATIONAL GUARANTEE FUND

Division 6 - Contract guarantees

SECTION 951   CLAIM BY SELLING CLIENT IN RESPECT OF DEFAULT BY SELLING DEALER  

951(1)  [Claim by selling client]  

Where, as at the end of the prescribed period in relation to a reportable transaction that is a sale by a dealer on behalf of a person:

(aa)  if a transfer of the securities concerned pursuant to the sale would be an SCH-regulated transfer - the person:

(i) in a case to which subparagraph (ii) does not apply - has done all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

(ii) if the dealer has been suspended by the participating exchange concerned, or the dealer's status as an SCH participant has been suspended under the SCH business rules, and that suspension has not been removed - has done, or is ready, willing and able to do, all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; and

(a)  if paragraph (aa) does not apply - the person:

(i) in a case to which subparagraph (ii) does not apply - has supplied to the dealer settlement documents for the purposes of the sale; or

(ii) if the dealer has been suspended by the participating exchange concerned and the suspension has not been removed - has supplied, or is ready, willing and able to supply, to the dealer settlement documents for the purposes of the sale; and

(b)  the dealer's obligations to the person in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged;

the person may make a claim in respect of the sale.

951(2)  [Person may make single claim]  

Where a person is entitled to make claims under subsection (1) in respect of 2 or more sales by the one dealer, the person may make a single claim in respect of 2 or more of those sales but a claim so made shall be treated for the purposes of subsection (3) as if it consisted of a separate claim in respect of each of those sales.

951(3)  [Board to be satisfied]  

Where a person makes a claim in respect of a sale of securities by a dealer on behalf of the claimant and the Board is satisfied that:

(a)  subsection (1) entitles the claimant to make the claim; and

(aa)  if a transfer of the securities pursuant to the sale would be an SCH-regulated transfer - the claimant:

(i) has done all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

(ii) has, for the purposes of the claim, in accordance with the SCH business rules, transferred to SEGC or to an Exchange body securities of the same kind and number as the first-mentioned securities; and

(b)  if paragraph (aa) does not apply - the claimant has:

(i) under the agreement for the sale, supplied to the dealer; or

(ii) for the purposes of the claim, supplied to SEGC;

settlement documents in relation to the sale; and

(c)  the dealer's obligations to the claimant in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged;

SEGC shall allow the claim and pay to the claimant the amount of that consideration less so much (if any) of the total of any brokerage fees and other charges, and any stamp duty and other duties and taxes, payable by the claimant in connection with the sale as has not already been paid by the claimant.

951(4)  [Exchange body to account to SEGC]  

If a person transfers securities to an Exchange body as mentioned in subparagraph (3)(aa)(ii), the Exchange body must account to SEGC for those securities in accordance with the SCH business rules.