Regulation Of Market Manipulation Australia -Myassignmenthelp.Com

Question: Discuss About The Regulation Of Market Manipulation Australia? Answer: Introduction: The Corporation Act 2001 regulates the act of the directors and prescribed certain provision in case the directors have failed to perform their duties properly. Many cases are filed in Australia on breach of directors duties and white collar crime. The case of Cassimatis is one of them (Tills and Wills 2016). The directors of the company were alleged to infringe the provision of the Corporation Act and failed to perform the duties of a director properly. Considering the facts of the case, it has been proved that the directors of the company had failed to act prudently and they had failed to protect the interest of the shareholders. Duties of the directors: Mr. and Mrs. Cassimatis were the directors of Storm Company and a licence holder of the Australian Financial Service. They had promoted a financial plan and requested the investors to invest their money in it. However, they were aware of the uncertain consequence of the plan but did not mentioned about it for earning extra benefit. It has been alleged that the directors had not acted in good faith and after the financial crisis; they even did not paid back to the investors. The directors duties have been prescribed under the Corporation Act 2001 and it has been stated that every director should have to take all the reasonable approach or the protection of the shareholders (Conaglen and Hill 2017). It is stated under section 180 of the Corporation Act 2001 that the directors should not do anything for their personal interest and they are obliged to act for the interest of the company and the shareholders. According to section 181 of the Corporation Act 2001, every director should have to comply with their duties in good faith and they must not have any ulterior motive while performing their business (Connor 2016). It has been observed in ASIC v Adler (2002) that it is the statutory duty of the directors to be acted in good faith and in case of any breach, they will be held liable under the Corporation Act 2001. It has also been observed that the directors should not earn the benefit by any process that is unacceptable in nature. The same principle has be en followed in the case of ASIC v Maxwell Ors [2006] NSWSC 1052. It has further been observed in the case of Cassimatis that the directors had inappropriately misused their position and therefore, they are also held liable under section 182 of the Corporation Act 2001 (Muscillo and Dawson 2016). It has been stated by the Act that a director should not gain illegal advantage during the course of their business and if they held liable for the same, will be charged under the provision of section 1317E of Corporation Act 2001. Mr. Cassimatis had stated that they had not done anything bad as there are always market risks in financial investment. However, it has been alleged against him that he had not mentioned about the risks at the time of requesting the investors. In the case of Cassimatis, Justice Edelman has been widened the grounds of the risk benefit. According to him, the term risk is not limited up to economical benefit of the company; risk can be generated to any interest of t he company. The case of Cassimatis has certain positive effects on the corporate world of Australia. Courts decision: Justice Edelman has delivered prominent judgment over the Cassimatis case and widened the principles lay down under certain specific sections of the Corporation Act 2001. Further he has clarified the work of the ASIC and considered the important role of the authority in case of the Australian corporations (Welch et al. 2016). The court was pleased to pass their judgment against the Directors of the Storm Financial and the judgment is based on certain reasons. Reasons: According to section 180 (1) of the Corporation Act, every directors of the companies should have to show due care and diligence to the shareholders (Chitimira 2015). They are restricted to earn any illegal gain by hiding the risky nature of any company generated plans. In this case, it has been observed that the directors of the company have failed to comply with these rules. They had not narrated the risks related to the investment in their newly generated plans and after the great financial crisis, all the moneys of the investors were gone and many of them had become bankrupted due to this. Further it was stated by the court that every director should have to give proper advice to the client regarding any respective matters. This provision has been given under section 945A [1] [c] of the Corporation Act 2001. However, Mr. Cassimatis had failed to provide the same. However, this provision has been repealed in the year 2012. The downturn of the company had compelled the investors to face a huge disaster as the directors had told them that the nature of the plan is of double gearing and therefore, they had borrowed the securities for their homes and marginal loan. After the disaster, they have lost their homes and many of them came to the street. In Vrisakis v Australian Securities and Investments Commission(1993) 9 WAR 395, it has been held that the directors should have to narrate all the foreseeable risks to the investors but as per the testimony of the investors, Cassimatis had failed to perform this duty and therefore, they are held liable under section 180 and sectio n 181 of the Corporation Act and hence the decisions of the court was justified. Conclusion: To sum up, it can be stated that the case of Cassimatis had clarified the applicability of the Corporation Act. The importance and power of the ASIC has also been widened in this case. The court has rightly observed and construed the provisions of the Corporation Act regarding directors duties Reference: Chitimira, H., 2015. The regulation of market manipulation in Australia: A historical comparative perspective.PER: Potchefstroomse Elektroniese Regsblad,18(2), pp.112-148. Conaglen, M. and Hill, J.G., 2017. Directors Duties and Legal Safe Harbours: A Comparative Analysis. Connor, T., 2016. Should the Statutory Business Judgment Rule Apply to Directors' Compliance Decisions?.COMPANY AND SECURITIES LAW JOURNAL,34, pp.403-407. Leibold, A., 2014. Extraterritorial Application of the FCPA Under International Law.Willamette L. Rev.,51, p.225. Muscillo, M. and Dawson, L., 2016. Avoiding defective disclosure in IPOs.Governance Directions,68(8), p.480. Tills, M. and Wills, C., 2016. Corporate law: Directors found guilty of breaching duties following corporation's breaches.Governance Directions,68(10), p.624. Welch, E.P., Saunders, R.S., Land, A.L., Turezyn, A.J. and Voss, J.C., 2016.Folk on the Delaware General Corporation Law: Fundamentals. Wolters Kluwer Law Business.