THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.4 - CONDUCT OF SECURITIES BUSINESS

Division 3 - Recommendations about securities

SECTION 850   DEFENCES TO ALLEGED BREACH OF SUBSECTION 849(2)  

850(1)  [Person not aware of matter to be disclosed]  

Where:

(a)  a person:

(i) when making a recommendation orally, fails to disclose; or

(ii) when making a recommendation in writing, fails to set out in that writing;

as required by subsection 849(2), particulars of a matter; and

(b)  it is proved that the person was not, and could not reasonably be expected to have been, aware of that matter when making the recommendation;

the failure is not a contravention of that subsection.

850(2)  [Chinese Wall]  

Where:

(a)  a dealer or investment adviser, or a representative of a dealer or investment adviser:

(i) when making a recommendation orally, fails to disclose; or

(ii) when making a recommendation in writing, fails to set out in that writing;

as required by subsection 849(2), particulars of a matter;

(b)  in the case of a representative of a dealer or investment adviser - by making the recommendation, the representative does an act as a representative of the dealer or investment adviser;

(c)  it is proved that the dealer or investment adviser had in operation, throughout a period beginning before the decision to make the recommendation was made and ending after the recommendation was made, arrangements to ensure that:

(i) the natural person who made the decision knew nothing about that matter before the end of that period; and

(ii) no advice with respect to the making of the recommendation was given to the person by anyone who knew anything about that matter; and

(d)  it is also proved that:

(i) the person in fact knew nothing about that matter before the end of that period; and

(ii) no such advice was so given;

the failure is not a contravention of that subsection.

850(3)  [Effect of defences on each other]  

Neither of subsections (1) and (2) limits the generality of the other.