File number: 2015/5344
Tribunal: Deputy President Brian Rayment QC
A delegate of the Australian Securities and Investments Commission (ASIC) made a banning order against the applicant, Mr McLean. On 7 December 2017 the Administrative Appeals Tribunal affirmed the decision.
The decision was based on Mr McLean’s contravention of section 1041A of the Corporations Act 2001 by creating an artificial price for trading in financial products. This was done by transactions between Mr McLean, in his capacity as Vice President in the Equities Department of Credit Suisse Management, and a trader with the aim of paying debts arising from early transactions. This involved the purchase and sale of ‘MINI warrants’ at prices calculated to discharge this debt.
The Tribunal investigated whether Mr McLean breached section 1041A and if so what banning order would be appropriate. The Tribunal stated that this section is breached if the applicant “took part” in the transaction and the transactions were “likely” to have the effect of creating an artificial price for trading.
Mr McLean claimed he didn’t take part in the transactions in question as he wasn’t a party to the transactions, his manager at the time was.
The Tribunal was satisfied he did take part as he played an important part in the transaction, the transactions were specifically agreed to by him, the transactions were discussed in advance and fully explained by discussions he had with the trader and he executed the transactions in question.
Second was whether the transaction was “likely” to have an effect that creates an artificial price for trading. In answering this question, the Tribunal considered the High Court decision Director of Public Prosecutions (Cth) v JM. That decision found that the transaction will have the required effect if it is entered into with the sole or dominant purpose of creating or maintaining the price at a particular level. Importantly, this conduct will amount to a breach because it does not reflect the forces of supply and demand. The Tribunal applied that rule to the present case and found that the transactions in question did not reflect the forces of genuine supply and demand, yet they would have appeared to be such to participants in the market.
The Tribunal went on to consider the length of the banning order and affirmed the delegate’s decision to keep it at the lower end of the scale (three years) for various reasons including that loss was not suffered, that he was directed to undertake the impugned transactions in the way they were executed, that the main source of the wrongdoing was the decisions taken by Mr Anderson, and the hardship he will suffer as a result of a banning order.