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Flashcards in Mkt Manip, Fraud, Theft Deck (22)
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1

Criminal law of Mkt Manipul

Offence: creating a incorrect view of the value of securities.
Principles of law:
1. prevent improper conduct by actors in the market
2. Penalise improper conduct to prevent future actions

2

Criminal law on market manipulation:
3 offences
Penalties

1. Making misleading statements to procure a transaction s. 89 FSA 2012 (to induce someone to enter into a transaction.)
2. Creating misleading impressions s. 90 FSA 2012 (deliberately or recklessly induce action re investments)
3. Making misleading payments in relation to benchmarks s. 91(1) FSA 2012

3

3 Defences for ss. 89(1) and (2) FSA 2012

s. 89(3) FSA 2012. The defendant must prove that:-
"the statement was made in conformity with -
(a) price stabilising rules,
(b) control of information rules, or
(c) the relevant provisions of Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments.

4

Making misleading statements to procure a transaction - 2 parts + Defence

1. s. 89(1) FSA 2012 - actus reus
2. s. 89(2) FSA 2012 - mens rea
Defence: s. 89(3)

5

1. s. 89(1) actus reus

actus reus: s. 89(1) FSA 2012, there must be a person who:-
"(a) makes a statement which P knows to be false or misleading in a material respect,
(b) makes a statement which is false or misleading in a material respect, being reckless as to whether it is, or
(c) dishonestly conceals any material facts whether in connect with a statement made by P or otherwise".
[offence is within statement]

6

2. s. 89(2) mens rea.

mens rea s. 89(2) FSA 2012,
"P commits an offence if P makes the statement or conceals the facts with the intention of inducing, or is reckless as to whether making it or concealing them may induced, another person (whether or not the person to whom the statement is made) -
(a) to enter into or offer to enter into, or to refrain from entering or offering to enter into, a relevant agreement, or
(b) to exercise or refrain from exercising, any rights conferred by a relevant investment."

7

Creating misleading impressions
2 Defences

s. 90 FSA 2012
'(1) A person ["P"] who does any act or engages in any course of conduct which creates a false or misleading impression as to the market in or the price or value of any relevant investments commits an offence if-
(a) P intends to create the impression, and
(b) the case falls within subsection (2) or (3) (or both).
'(2) The case falls within this subsection if P intends, by creating the impression, to induce another person to acquire, dispose of, subscribe for or underwrite the investments or to refrain from doing so or to exercise or refrain from exercising any rights conferred by the investments."
(3) 'The case falls within this subsection if-
(a) P knows that the impression is false or misleading or is reckless as to whether it is, and
(b) P intends by creating the impression to produce any of the results in subsection (4) or is aware that creating the impression is likely to produce ay of the results in that subsection.'
(4) 'Those results are-
(a) the making of a gain for P or another, or
(b) the causing of loss to another person or the exposing of another person to the risk of loss'

Defence: s. 89(3)(a) and (b)

8

Fraud

Penalty

s. 1 of the Fraud Act 2006
(1) A person is guilty of fraud if he is in breach of any of the sections listed in subsection (2) (which provide for different ways of committing the offence).
(2) The sections are—
(a) section 2 (fraud by false representation),
(b) section 3 (fraud by failing to disclose information), and
(c) section 4 (fraud by abuse of position).

s. 1(3) of the Fraud Act 2006
(3) A person who is guilty of fraud is liable—
(a) on summary conviction, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum (or to both);
(b) on conviction on indictment, to imprisonment for a term not exceeding 10 years or to a fine (or to both).

9

Fraud by false representation

s. 2 of the Fraud Act 2006
(1) A person is in breach of this section if he—
(a) dishonestly makes a false representation, and (b)
intends, by making the representation—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.
(2) A representation is false if—
(a) it is untrue or misleading, and
(b) the person making it knows that it is, or might be, untrue or misleading.
(3) “Representation” means any representation as to fact or law, including a representation as to the state of mind of—
(a) the person making the representation, or
(b) any other person.
(4) A representation may be express or implied.
(5) For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

10

Fraud by failing to disclose information

s. 3 of the Fraud Act 2006
(1) A person is in breach of this section if he—
(a) dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and
(b) intends, by failing to disclose the information—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.

11

Fraud by abuse of position

s. 4 of the Fraud Act 2006
(1) A person is in breach of this section if he—
(a) occupies a position in which he is expected to safeguard, or not to act against,the financial interests of another person,
(b) dishonestly abuses that position, and
(c) intends, by means of the abuse of that position—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.
(2) A person may be regarded as having abused his position even though his conduct consisted of an omission rather than an act.

12

“Gain” and “loss”

s. 5 of the Fraud Act 2006
(1) The references to gain and loss in sections 2 to 4 are to be read in accordance with this section.
(2) “Gain” and “loss”—
(a) extend only to gain or loss in money or other property;
(b) include any such gain or loss whether temporary or permanent;
and “property” means any property whether real or personal (including things in action and other intangible property).
(3) “Gain” includes a gain by keeping what one has, as well as a gain by getting what one does not have.
(4) “Loss” includes a loss by not getting what one might get, as well as a loss by parting with what one has.

13

Evidence

s. 30 of the Fraud Act 2006
(1) A person is not to be excused from—
(a) answering any question put to him in proceedings relating to property, or
(b) complying with any order made in proceedings relating to property,
on the ground that doing so may incriminate him or his spouse or civil partner of an offence under this Act or a related offence.
(2) But, in proceedings for an offence under this Act or a related offence, a statement or admission made by the person in—
(a) answering such a question, or
(b) complying with such an order,
is not admissible in evidence against him or (unless they married or became civil partners after the making of the statement or admission) his spouse or civil partner.
(3) “Proceedings relating to property” means any proceedings for—
(a) the recovery or administration of any property,
(b) the execution of a trust, or
(c) an account of any property or dealings with property,
and “property” means money or other property whether real or personal (including things in action and other intangible property).
(4) “Related offence” means—
(a) conspiracy to defraud;
(b) any other offence involving any form of fraudulent conduct or purpose.

14

Theft

Penalty

s. 1 of the Theft Act 1968
(1) A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it ; and "thief " and " steal " shall be construed accordingly.
(2) It is immaterial whether the appropriation is made with a view to gain, or is made for the thief's own benefit.
(3) The five following sections of this Act shall have effect as regards the interpretation and operation of this section (and, except as otherwise provided by this Act, shall apply only for purposes of this section).

s. 1 of the Theft Act 1968
Maximum: 7 years’ custody

15

"Dishonestly"

s. 2 of the Theft Act 1968
(1) A person's appropriation of property belonging to another is not to be regarded as dishonest-
(a) if he appropriates the property in the belief that he has in law the right to deprive the other of it, on behalf
of himself or of a third person ; or
(b) if he appropriates the property in the belief that he would have the other's consent if the other knew of the appropriation and the circumstances of it ; or
(c) (except where the property came to him as trustee or personal representative) if he appropriates the property in the belief that the person to whom the property belongs cannot be discovered by taking reasonable
steps.
(2) A person's appropriation of property belonging to another may be dishonest notwithstanding that he is willing to pay for the property.

16

"Appropriates"

s. 3 of the Theft Act 1968
(1) Any assumption by a person of the rights of an owner amounts to an appropriation, and this includes, where he has come by the property (innocently or not) without stealing it, any later assumption of a right to it by keeping or dealing with it as owner.
(2) Where property or a right or interest in property is or purports to be transferred for value to a person acting in good faith, no later assumption by him of rights which he believed himself to be acquiring shall, by reason of any defect in the transferor's title, amount to theft of the property.

17

" Property ".

s. 4(1) of the Theft Act 1968
(1) " Property " includes money and all other property,
real or personal, including things in action and other intangible property.

18

"Belong to another"

s. 5 of Theft Act 1968
(1) Property shall be regarded as belonging to any person having possession or control of it, or having in it any proprietary right or interest (not being an equitable interest arising only from an agreement to transfer or grant an interest).
(2) Where property is subject to a trust, the persons to whom it belongs shall be regarded as including any person having a right to enforce the trust, and an intention to defeat the trust shall be regarded accordingly as an intention to deprive of the property any person having that right.
(3) Where a person receives property from or on account of another, and is under an obligation to the other to retain and deal with that property or its proceeds in a particular way, the property or proceeds shall be regarded (as against him) as belonging to the other.
(4) Where a person gets property by another's mistake, and is under an obligation to make restoration (in whole or in part) of the property or its proceeds or of the value thereof, then to the extent of that obligation the property or proceeds shall be regarded (as against him) as belonging to the person entitled to restoration, and an intention not to make restoration shall be regarded accordingly as an intention to deprive that person of the property or proceeds.

19

"With the intention of permanently depriving the other of it"

s. 6 of the Theft Act 1968
(1) A person appropriating property belonging to another without meaning the other permanently to lose the thing itself is nevertheless to be regarded as having the intention of permanently depriving the other of it if his intention is to treat the thing as his own to dispose of regardless of the other's rights ; and a borrowing or lending of it may amount to so treating it if, but only if,
the borrowing or lending is for a period and in circumstances making it equivalent to an outright taking or disposal.
(2) Without prejudice to the generality of subsection (1) above, where a person, having possession or control (lawfully or not) of property belonging to another, parts with the property under a condition as to its return which he may not be able to perform, this (if done for purposes of his own and without the other's authority) amounts to treating the property as his own to dispose of regardless of the other's rights.

20

"gain", "loss" and "goods"

s. 34 of the Theft Act 1968
(1) Sections 4(1) and 5(1) of this Act shall apply generally for purposes of this Act as they apply for purposes of section 1.
(2) For purposes of this Act-
(a) " gain " and " loss " are to be construed as extending only to gain or loss in money or other property, but as extending to any such gain or loss whether temporary or permanent ; and -
(i) "gain" includes a gain by keeping what one has, as well as a gain by getting what one has not; and
(ii) "loss" includes a loss by not getting what one might get, as well as a loss by parting with what one has ;
(b) "goods", except in so far as the context otherwise requires, includes money and every other description of property except land, and includes things severed from the land by stealing.

21

Evidence and procedure on charge of theft or handling stolen goods

s. 27(1) of the Theft Act 1968
(1) Any number of persons may be charged in one indictment, with reference to the same theft, with having different times or at the same time handled all or any of the stolen goods, and the persons so charged may be tried together.

22

Order for restitution

s. 28 of the Theft Act 1968
(1) Where goods have been stolen, and a person is convicted of any offence with reference to the theft (whether or not the stealing is the gist of his offence), the court by or before which the offender is convicted may on the conviction exercise any of the following powers