Superannuation Industry (Supervision) Act 1993

PART 20 - ADMINISTRATIVE DIRECTIONS AND PENALTIES FOR CONTRAVENTIONS RELATING TO SELF MANAGED SUPERANNUATION FUNDS

History

Pt 20 inserted by No 11 of 2014, s 3 and Sch 2 item 22, applicable to contraventions that occur on or after 1 July 2014.

Former Pt 20 repealed by No 123 of 2001, s 3 and Sch 1 item 334, effective 11 March 2002. Pt 20 formerly read:

PART 20 - PUBLIC OFFER ENTITIES - INSIDER TRADING

Division 1 - Preliminary

SECTION 173 SECTION 173 OBJECT OF PART
173
The object of this Part is to stop people from unfairly taking advantage of information that is not generally available in connection with applications for the issue of superannuation interests in public offer entities.
SECTION 174 SECTION 174 SUPERANNUATION INTEREST MEANS INTEREST IN PUBLIC OFFER ENTITY
174
This Part only applies in relation to superannuation interests in public offer entities. The expression ' superannuation interest ' , when used in this Part, is limited to a superannuation interest in a public offer entity.
Division 2 - Interpretation

SECTION 175 SECTION 175 DEFINITIONS
175
In this Part:
'information'
includes:

(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; or

(b) matters relating to the intentions, or the likely intentions, of a person;

'officer'
, in relation to a body corporate, means:

(a) an executive officer of the body corporate; or

(b) an employee of the body corporate.
SECTION 176 WHEN INFORMATION IS GENERALLY AVAILABLE
176(1)
For the purposes of this Part, information is generally available if:

(a) it is readily observable; or

(b) both of the following apply:

(i) it has been made known in a way that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information;

(ii) after it was so made known, a reasonable period for it to be disseminated among such persons has elapsed; or

(c) it consists of deductions, conclusions or inferences made or drawn from either or both of the following:

(i) information that is readily observable;

(ii) information made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information.

176(2)
Nothing in subsection (1) limits anything else in it.

SECTION 177 SECTION 177 WHEN INFORMATION HAS A MATERIAL EFFECT ON PRICE OR VALUE OF SUPERANNUATION INTERESTS
177
For the purposes of this Part, a reasonable person would be taken to expect information to have a material effect on the price or value of superannuation interests (the ' first interests ' ) if the information would, or would be likely to, influence persons who commonly invest in superannuation interests in deciding whether or not to apply for the issue of the first interests. SECTION 178 INFORMATION IN POSSESSION OF OFFICER OF BODY CORPORATE
178(1)
For the purposes of this Part, a body corporate is taken to possess any information which:

(a) is in the possession of an officer of the body corporate; and

(b) came into the officer's possession in the course of performing duties as such an officer.

178(2)
For the purposes of this Part, it is presumed that a body corporate knows, or ought reasonably to know, anything that one of its officers knows, or ought reasonably to know, through being one of its officers.

Division 3 - Insider trading rules
SECTION 179 WHEN A PERSON CONTRAVENES THE INSIDER TRADING RULES IN RELATION TO SUPERANNUATION INTERESTS
179(1)
For the purposes of this Part, a person (the ' insider ' ) contravenes the insider trading rules if:

(a) the insider possesses information that is not generally available; and

(b) if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of superannuation interests; and

(c) the insider knows, or ought reasonably to know, that:

(i) the information is not generally available; and

(ii) if it were generally available, it might have a material effect on the price or value of those interests; and

(d) the insider, whether as principal or agent:

(i) applies for, or enters into an agreement to apply for, the issue of any such interests; or

(ii) procures another person to apply for, or to enter into an agreement to apply for, the issue of any such interests.

179(2)
The remaining provisions of this Division provide for special cases in which a person is taken not to have contravened the insider trading rules.

179(3)
The consequences of contravening the insider trader rules are set out in Division 4 (which deals with criminal liability), Divisions 5 and 6 (which deal with civil liability) and Division 7 (which deals with orders by the Court).

SECTION 180 SECTION 180 EXCEPTION TO INSIDER TRADING RULES - CHINESE WALL ARRANGEMENTS BY BODIES CORPORATE
180
A body corporate does not contravene the insider trading rules by entering into a transaction or agreement at a particular time merely because of information in the possession of an officer of the body corporate if:

(a) the decision to enter into the transaction or agreement was taken on behalf of the body corporate by a person or persons other than that officer; and

(b) the body corporate had in operation at that time arrangements that could reasonably be expected to ensure that:

(i) the information was not communicated to the person or persons who made the decision; and

(ii) no advice with respect to the transaction or agreement was given to that person or any of those persons by a person in possession of the information; and

(c) the information was not so communicated and no such advice was given.
SECTION 181 SECTION 181 EXCEPTION TO INSIDER TRADING RULES - KNOWLEDGE OF PERSON'S OWN INTENTIONS OR ACTIVITIES
181
An individual does not contravene the insider trading rules by entering into a transaction or agreement in relation to superannuation interests in a particular superannuation entity merely because the individual is aware that he or she proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity. SECTION 182 EXCEPTIONS TO INSIDER TRADING RULES - SPECIAL RULES RELATING TO BODIES CORPORATE
182(1)
A body corporate does not contravene the insider trading rules by entering into a transaction or agreement in relation to superannuation interests in a particular superannuation entity merely because the body corporate is aware that it proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity.

182(2)
A body corporate does not contravene the insider trading rules by entering into a transaction or agreement in relation to superannuation interests in a particular superannuation entity merely because:

(a) an officer of the body corporate is aware that the body corporate proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity; and

(b) the officer became aware of the matters referred to in paragraph (a) in the course of the performance of duties as such an officer.

SECTION 183 SECTION 183 EXCEPTION TO INSIDER TRADING RULES - OFFICERS OR AGENTS OF BODIES CORPORATE
183
A person does not contravene the insider trading rules by entering into a transaction or agreement on behalf of a body corporate in relation to superannuation interests in a particular superannuation entity merely because:

(a) the person is aware that the body corporate proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity; and

(b) the person became aware of the matters mentioned in paragraph (a) in the course of the performance of duties as an officer of the body corporate or in the course of acting as an agent of the body corporate.
Division 4 - Offence of contravening the insider trading rules
SECTION 184 OFFENCE OF CONTRAVENING THE INSIDER TRADING RULES
184(1)
A person must not contravene the insider trading rules.
Penalty: Imprisonment for 5 years.

Note:

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

184(2) Defences.
Subsection (1) does not apply if the defendant proves that one of the exceptions to the insider trading rules in sections 180 to 183 apply to the defendant.
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History

S 184(2) substituted by No 160 of 2000, s 3 and Sch 3 item 62, effective 18 January 2001. S 184(2) formerly read:

184(2)
In a prosecution under this section:

(a) it is not necessary for the prosecution to prove the non-existence of facts or circumstances described in sections 180 to 183; and

(b) it is a defence if the defendant proves that the facts or circumstances existed.

184(3)
In the case of the defendant having entered into, or procured another person to enter into, a transaction or agreement at a time when certain information was in the defendant's possession, subsection (1) does not apply if the defendant proves that:

(a) the information came into the defendant's possession solely as a result of the information having been made known in a way that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information; or

(b) the other party to the transaction or agreement knew, or ought reasonably to have known, of the information before entering into the transaction or agreement.
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S 184(3) substituted by No 160 of 2000, s 3 and Sch 3 item 62, effective 18 January 2001. S 184(3) formerly read:

184(3)
In a prosecution brought against a person for an offence against this section because the person entered into, or procured another person to enter into, a transaction or agreement at a time when certain information was in the defendant's possession:

(a) it is a defence if the defendant proves that the information came into the defendant's possession solely as a result of the information having been made known in a way that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information; and

(b) it is a defence if the defendant proves that the other party to the transaction or agreement knew, or ought reasonably to have known, of the information before entering into the transaction or agreement.

Division 5 - Civil liability for contravention of the insider trading rules - recovery of loss or damage
SECTION 185 CIVIL LIABILITY WHERE PLAINTIFF SUFFERS LOSS OR DAMAGE BECAUSE OF A CONTRAVENTION OF THE INSIDER TRADING RULES
185(1)
If a person (the ' plaintiff ' ) suffers loss or damage by the conduct of another person (the `primary defendant ' ) that was engaged in in contravention of the insider trading rules, the plaintiff may recover the amount of the loss or damage by action against:

(a) the primary defendant; or

(b) any person involved in the contravention.

185(2)
An action may be begun even if the defendant has been convicted of an offence in respect of the contravention.

185(3)
An action must be begun within 6 years after the day on which the cause of action arose.

185(4)
This section does not affect any liability that a person has under any other provision of this Act or under any other law.

Division 6 - Civil liability for contravention of the insider trading rules - recovery of price differential
SECTION 186 CIVIL LIABILITY - TRUSTEE MAY RECOVER PRICE DIFFERENTIAL
186(1)
If a person (the `insider ' ) contravenes the insider trading rules in relation to particular superannuation interests, the trustee of the public offer entity concerned may recover the amount described in subsection (2) by action against:

(a) in any case - the insider; or

(b) if the insider's contravention relates to the procurement of another person to apply for, or to enter into an agreement to apply for, superannuation interests - that other person; or

(c) any other person involved in the contravention.

186(2)
The trustee may recover the amount (if any) by which:

(a) the price at which the superannuation interests were applied for, or agreed to be applied for, by the insider or by the other person mentioned in paragraph (1)(b);
was less than:

(b) the price at which the superannuation interests would have been likely to have been applied for if the information had been generally available.

186(3)
An action may be begun even if the defendant has been convicted of an offence for a contravention of the insider trading rules.

186(4)
An action must be begun within 6 years after the day on which the cause of action arose.

186(5)
This section does not affect any liability that a person has under any other provision of this Act or under any other law.
SECTION 187 ASIC MAY BRING AN ACTION IN THE NAME OF A TRUSTEE
187
If ASIC thinks that it is in the public interest to do so, ASIC may bring an action under this Division in the name, and for the benefit of, a trustee for the recovery of an amount that the trustee is entitled to recover under this Division.
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History

S 187 amended by No 54 of 1998.

SECTION 188 SPECIAL DEFENCE WHERE INFORMATION MADE KNOWN IN A CERTAIN MANNER
188(1)
This section applies to an action brought against a person (the ' defendant ' ) under this Division because the defendant entered into, or procured another person to enter into, a transaction or agreement at a time when certain information was in the defendant's possession.

188(2)
It is a defence if the defendant proves that the information came into the defendant's possession solely as a result of the information having been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information.
SECTION 189 AMOUNTS RECOVERED TO BE HELD ON TRUST FOR CERTAIN INTEREST-HOLDERS
189
An amount recovered in an action under this Division in respect of an application for, or agreement to apply for, particular superannuation interests:

(a) is to be held by the trustee of the superannuation entity concerned on behalf of the persons who, at the time of the application or agreement, had superannuation interests in the entity; and

(b) is to be held on their behalf in the respective proportions that, at that time, their individual interests bore to the total of those interests. SECTION 190 OFFSET OF AMOUNTS RECOVERED IN OTHER PROCEEDINGS
190(1)
The amount recoverable from a person under this Division in respect of a particular act or transaction is to be reduced by any amount recovered from, or ordered to be paid by, the person in proceedings instituted under another provision of this Act or under the Corporations Act 2001 in respect of the same act or transaction.
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History

S 190(1) amended by No 55 of 2001, s 3 and Sch 3 item 506, by substituting " Corporations Act 2001 " for " Corporations Law " , effective 15 July 2001.

190(2)
The burden of proving that those proceedings related to the same act or transaction is on the defendant.

Division 7 - Special powers of Court to make orders in cases of contravention of the insider trading rules

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Div 7 repealed by No 123 of 2001, s 3 and Sch 1 item 334, effective 11 March 2002.

SECTION 191 SPECIAL POWERS OF COURT
191(1)
If, in a proceeding under, or arising out of, this Act, the Court finds that a contravention of the insider trading rules has occurred, the Court may make such order or orders as it thinks just in addition to any other orders that it may make under any other provision of this Act.

191(2)
The orders which may be made include, but are not limited to:

(a) an order restraining the exercise of any rights attached to superannuation interests;

(b) an order restraining the issue of superannuation interests;

(c) an order restraining an application for superannuation interests;

(d) an order directing the redemption of superannuation interests;

(e) an order cancelling an agreement for the issue of superannuation interests;

(f) for the purpose of securing compliance with any other order made under this section - an order directing a person to do, or refrain from doing, a specified act.

Division 2 - Directions

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SECTION 164 VARIATION ON REQUEST

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164(1)
A person to whom a rectification direction or an education direction is given may request the Regulator to vary the direction.

164(2)
The request must be made by written notice given to the Regulator before the end of the period specified in the direction for the purposes of subsection 159(4) or 160(3) .

164(3)
The request must set out the reasons for making the request.

164(4)
The Regulator must decide:

(a) to vary the direction in accordance with the request; or

(b) to vary the direction otherwise than in accordance with the request; or

(c) to refuse to vary the direction.

164(5)
If the Regulator does not make a decision on the request before the end of 28 days after the day the request was made, the Regulator is taken, at the end of that period, to have decided to refuse the request.

164(6)
If the Regulator makes a decision on the request before the end of the period referred to in subsection (5), the Regulator must:

(a) notify the person of the Regulator ' s decision; and

(b) if the decision is to vary the direction (whether or not in accordance with the request) - give the person a copy of the varied direction; and

(c) if the decision is to refuse to vary the direction, or to vary the direction otherwise than in accordance with the request - give the person written reasons for the decision.

164(7)
If a person makes a request under this section, then, for the purposes of subsection 159(6) or 160(4) , the period specified in the direction for the purposes of subsection 159(4) or 160(3) is taken to be extended by 1 day for each day in the period:

(a) beginning at the start of the day the request was made; and

(b) ending at the end of the day that the Regulator notifies the person that a decision has been made on the request.

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