Inducing persons to deal

Offence title:

Inducing persons to deal

Act:

1041F Corporations Act

Offence:

(1)   A person must not, in this jurisdiction, induce another person to deal in financial products:

(a)   by making or publishing a statement, promise or forecast if they know or are reckless as to whether it is misleading, false or deceptive; or

(b)   by a dishonest concealment of material facts; or

(c)    by recording or storing information that the person knows to be false or misleading in a material particular or materially misleading if:

                                           i.         the information is recorded or stored in, or by means of, a mechanical, electronic or other device; and

                                         ii.         when the information was so recorded or stored, the person had reasonable grounds for expecting that it would be available to the other person, or a class of persons that includes the other person.

Note: Failure to comply with this subsection is an offence: s. 1311(1).

Note: Failure to comply with this subsection is a contravention: s.1317E and 1317S.

(3)   This section applies to the following as if that conduct were dealing in financial products:

(a)   applying to become a standard employer-sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993) of a superannuation entity (within the meaning of that Act);

(b)   permitting a person to become a standard employer-sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993) of a superannuation entity (within the meaning of that Act);

(c)    applying, on behalf of an employee (within the meaning of the Retirement Savings Accounts Act 1997), for the employee to become the holder of an RSA product.

Penalty:

15 years imprisonment

Summary/Indictable/mixed:

Indictable

Jurisdiction:

District or Supreme Court

How committed:

A managing director authorise a press release to raise capital suggesting that the supply chain of components required to make their widgets is fully operational, when in fact they are aware that a supplier has refused to deal with them anymore. This supply chain breakdown will be fatal to the profitability of the company.

Important note:

Defence: For defences to a prosecution based on this section, see Division 4 - Defences, relief and limits on liability: s.1044A General defence or relief for publishers and 1044B Limit on liability for misleading or deceptive conduct.