THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.4 - CONDUCT OF SECURITIES BUSINESS

Division 3 - Recommendations about securities

SECTION 851   ADVISER MUST HAVE REASONABLE BASIS FOR RECOMMENDATION  

851(1)  [Contravention if no reasonable basis]  

A securities adviser who:

(a)  makes a securities recommendation to a person who may reasonably be expected to rely on it; and

(b)  does not have a reasonable basis for making the recommendation to the person;

contravenes this section.

851(2)  [Requirements for reasonable basis]  

For the purposes of subsection (1), a securities adviser does not have a reasonable basis for making a securities recommendation to a person unless:

(a)  in order to ascertain that the recommendation is appropriate having regard to the information the securities adviser has about the person's investment objectives, financial situation and particular needs, the securities adviser has given such consideration to, and conducted such investigation of, the subject matter of the recommendation as is reasonable in all the circumstances; and

(b)  the recommendation is based on that consideration and investigation.

851(3)  [Contravention of subsection (1) not an offence]  

A person who contravenes subsection (1) is not guilty of an offence.