The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has today introduced legislation to stamp out unsolicited, below-value share offers and to crack down on insider trading and market manipulation.
"This legislation is designed to stop unscrupulous operators from duping vulnerable investors into handing over their shares for well below market prices," Mr Bowen said.
"The Government is determined to ensure that those seeking improper financial gain will no longer be able to gain access to a company's member register to contact unsuspecting investors."
The legislation requires anyone seeking a copy of a member register to state what their intended use for the information contained and enables companies to refuse to provide information if it is not sought for a proper purpose. Certain improper purposes - to be defined in associated Regulations - will include seeking access to a register for the purpose of making an unsolicited offer for shares in a listed company (other as part of a genuine takeover).
"Under this legislation it will be an offence to make a false statement when requesting a copy of the register, with an associated penalty of up to 12 months' imprisonment."
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," Mr Bowen said.
"At present, the benefits that can be gained from engaging in such conduct can significantly exceed the current maximum penalty. The Government is significantly increasing these penalties to provide an appropriate level of deterrence."
As insider trading and other market offences are notoriously difficult to prove on the basis of circumstantial evidence alone, the legislation will also enable telecommunications interception material to be collected to aid these investigations.
"Increased investigative powers will improve both the investigation and prosecution of these offences, while ensuring important safeguards, such as the need for a judge-issued warrant before any telephone interception material may be gathered," Mr Bowen said.
Both sets of reforms are contained in the Corporations Amendment (No 1) Bill 2010.
24 June 2010