House of Representatives

Corporations Amendment (No. 1) Bill 2010

Explanatory Memorandum

Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP

Chapter 4 Amendments to the Telecommunications (Interception and Access) Act 1979

Outline of chapter

4.1 The Bill includes the insider trading and market misconduct provisions in Part 7.10 of the Corporations Act in the list of serious offences in section 5D of the Telecommunications (Interception and Access) Act 1979 (TIA Act).

Context of amendments

4.2 Insider trading and market manipulation offences cause serious harm to the fair and efficient functioning of Australia's financial markets. These markets function best when information is widely dispersed and investors have confidence in the fairness of markets.

4.3 The offences related to market misconduct have been identified as offences which should be included in the definition of 'serious offence' in section 5D of the TIA Act. However, the current level of criminal penalty imposable has been identified as insufficient.

4.4 Insider trading and other market offences are difficult to investigate as these offences by their very nature involve complex networks of people, technological sophistication and avoidance of paper and traceable communications. In addition, the transactions often occur in real time, meaning that telephone conversations are often the only evidence of the offence.

Summary of new law

4.5 The Bill amends the TIA Act to include the following offences in section 5D of the TIA Act:

·
insider trading;
·
market manipulation;
·
false trading and market rigging - creating a false or misleading appearance of active trading;
·
false trading and market rigging - artificially maintaining a trading price;
·
dissemination of information about illegal transactions;
·
false or misleading statements;
·
inducing persons to deal in financial products; and
·
dishonest conduct in relation to a financial service or product.

Comparison of key features of new law and current law

New law Current law
An interception agency will be able to apply for telecommunications interception warrants in the course of investigations into insider trading and market manipulation offences. Telecommunications interception warrants are not currently available for the investigation of insider trading and market manipulation offences.

Detailed explanation of new law

4.6 The Bill will amend the TIA Act to include the insider trading offences and those in Part 7.10 of the Corporations Act as serious offences for the purpose of section 5D of the TIA Act. [Schedule 1, Item 21]

4.7 This will enable an interception agency to apply for a telecommunications interception warrant in the course of investigations into these offences, including investigations assisted by ASIC.

Application and transitional provisions

4.8 The provisions contained in this Bill commence on proclamation.


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