THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.10 - THE NATIONAL GUARANTEE FUND

Division 6 - Contract guarantees

SECTION 952   CLAIM BY BUYING CLIENT IN RESPECT OF DEFAULT BY BUYING DEALER  

952(1)  [Claim by buying client]  

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

(a)  the person:

(i) in a case to which subparagraph (ii) does not apply - has paid to the dealer the purchase price in relation to the purchase; 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 paid, or is ready, willing and able to pay, to the dealer the purchase price in relation to the purchase; and

(aa)  if a transfer of the securities concerned pursuant to the purchase would be an SCH-regulated transfer - the dealer's obligations to the person in respect of the purchase, in so far as they relate to the transfer of securities to the person, have not been discharged; and

(b)  if paragraph (aa) does not apply - the dealer's obligations to the person in respect of the purchase, in so far as they relate to settlement documents in relation to the purchase, have not been discharged;

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

952(2)  [Person may make single claim]  

Where a person is entitled to make claims under subsection (1) in respect of 2 or more purchases by the one dealer, the person may make a single claim in respect of 2 or more of those purchases 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 purchases.

952(3)  [Board to be satisfied]  

Where a person makes a claim in respect of a purchase 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

(b)  the claimant has:

(i) under the agreement for the purchase, paid to the dealer; or

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

the amount of the consideration for the purchase; and

(ba)  if a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer - the dealer's obligations to the claimant in respect of the purchase, in so far as they relate to the transfer of securities to the claimant, have not been discharged; and

(c)  if paragraph (ba) does not apply - the dealer's obligations to the claimant in respect of the purchase, in so far as they relate to settlement documents in relation to the purchase, have not been discharged;

SEGC shall allow the claim.

952(4)  [SCH-regulated transfer]  

If:

(a)  SEGC allows under subsection (3) a claim in respect of a purchase of securities by a dealer on behalf of a person; and

(b)  a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer;

SEGC must, subject to section 952A, transfer to the claimant securities of the same kind and number as the first-mentioned securities.

952(5)  [Non-SCH-regulated transfer]  

If:

(a)  SEGC allows under subsection (3) a claim in respect of a purchase of securities by a dealer on behalf of a person; and

(b)  subsection (4) does not apply;

SEGC must, subject to section 953, supply to the claimant settlement documents in relation to the purchase.