The Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP, has today reintroduced the Corporations Amendments (No. 1) Bill 2010, which cracks down on the practice of unsolicited off-market share offers that are below value to vulnerable investors. The legislation also substantially increases the penalties for persons or businesses that breach the market manipulation and insider trading provisions.
'The Government has today introduced legislation to protect vulnerable investors from unscrupulous operators seeking to obtain their shares.
'These changes will ensure that the information contained in a member register is not misused by those seeking to target vulnerable investors' Mr Bradbury said.
The legislation changes the way information contained in company registers is accessed by requiring someone seeking a copy of the register to state what use they will make of the information contained in the register.
Importantly, the legislation will enable companies to refuse to provide information if the purpose is improper, as provided for in the Corporations Regulations. It will be an offence to make a false statement when requesting a copy of the register and the penalty will be up to 12 months imprisonment and the legislation will also make it an offence to use any information obtained for any improper purpose.
These reforms will prohibit a person from using the information in the register to:
- make unsolicited share offers (other than a takeover);
- solicit members by brokers;
- solicit members by charities; and
- use the register to gather information about the wealth of individuals.
The legislation will also increase the penalties for market offences, such as insider trading and market manipulation. These offences have the potential to seriously undermine the stability and transparency of financial markets, making it essential that the penalties for these offences reflect their potential impact on the community. Currently, the benefits that can be gained from engaging in such conduct can significantly exceed the present maximum penalty.
As these offences are recognised as being difficult to investigate and prove, the legislation will also improve how they can be investigated through enhancing the Australian Securities and Investments Commission search warrant power and by enabling telecommunications interception material to be collected by agencies such as the Australian Federal Police.
'The legislation will enable the appropriate agencies to obtain telecommunications interception evidence when investigating breaches of market offences', Mr Bradbury said.
'These increased investigative powers will improve both the investigation and prosecution of these offences.'
29 September 2010