To what extent is ‘intent’ relevant to Australia’s market manipulation regime? How does this approach differ from other jurisdictions and should it be reconsidered?

Abstract

This paper discusses the relevance of ‘intent’ in Australia’s market manipulation regime and contrasts this position with the laws in Hong Kong and Singapore. The scope of the analysis is particularly focused on no change in beneficial ownership trades (‘wash trades’), but does briefly cover broader areas of market manipulation.In Australia, significant changes were made to the market manipulation regime which had the affect of lessening the relevance of intent and removing previously available defences, eg no intent to mislead the market. In the recent case ASIC v Soust (2010) 28 ACLC it was, however, determined that the intent of a transaction is still required to be considered with respect to market manipulation. This paper also highlights that financial market participants may potentially be exposed to reputation damage even when executing genuine transactions.A key conclusion of the paper is that Australian legislatures should either reinstate the previously available defences or consider removing the deeming section with respect to wash trades.