THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.11 - CONDUCT IN RELATION TO SECURITIES

Division 2 - Prohibited conduct

SECTION 998   FALSE TRADING AND MARKET RIGGING TRANSACTIONS  

998(1)  [Creation of false appearance of trading]  

A person shall not create, or do anything that is intended or likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities.

998(2)  (Omitted by No 110 of 1990, Sch 1 (effective 18 December 1990).)

998(3)  [Fictitious transactions]  

A person shall not, by means of purchases or sales of any securities that do not involve a change in the beneficial ownership of those securities or by any fictitious transactions or devices, maintain, increase, reduce, or cause fluctuations in, the market price of any securities.

998(4)  (Omitted by No 110 of 1990, Sch 1 (effective 18 December 1990).)

998(5)  [False or misleading appearance]  

Without limiting the generality of subsection (1), a person who:

(a)  enters into, or carries out, either directly or indirectly, any transaction of sale or purchase of any securities, being a transaction that does not involve any change in the beneficial ownership of the securities;

(b)  offers to sell any securities at a specified price where the person has made or proposes to make, or knows that an associate of the person has made or proposes to make, an offer to buy the same number, or substantially the same number, of securities at a price that is substantially the same as the first-mentioned price; or

(c)  offers to buy any securities at a specified price where the person has made or proposes to make, or knows that an associate of the person has made or proposes to make, an offer to sell the same number, or substantially the same number, of securities at a price that is substantially the same as the first-mentioned price;

shall be deemed to have created a false or misleading appearance of active trading in those securities on a stock market.

998(6)  [Defence to subsec (5)]  

In a prosecution of a person for a contravention of subsection (1) constituted by an act referred to in subsection (5), it is a defence if it is proved that the purpose or purposes for which the person did the act was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on a stock market.

998(7)  [Change in beneficial ownership]  

A purchase or sale of securities does not involve a change in the beneficial ownership for the purposes of this section if a person who had an interest in the securities before the purchase or sale, or an associate of the person in relation to those securities, has an interest in the securities after the purchase or sale.

998(8)  [Defence to subsec (3)]  

In a prosecution for a contravention of subsection (3) in relation to a purchase or sale of securities that did not involve a change in the beneficial ownership of those securities, it is a defence if it is proved that the purpose or purposes for which the securities were bought or sold was not, or did not include, the purpose of creating a false or misleading appearance with respect to the market for, or the price of, securities.

998(9)  [Reference to sale or purchase]  

The reference in paragraph (5)(a) to a transaction of sale or purchase of securities includes:

(a)  a reference to the making of an offer to sell or buy securities; and

(b)  a reference to the making of an invitation, however expressed, that expressly or impliedly invites a person to offer to sell or buy securities.