N.S.W. proposes new laws for securities markets

Press, Volume CXI, Issue 32588, 23 April 1971, Page 16

N.S.W. proposes new laws for securities markets

(N.Z. Press Association—Copyright)

SYDNEY, April 22.

Stock market speculators who “sell short” (sell shares they do not own) will face gaol sentences of up to two years under the new legislation which is proposed for New South Wales.

Stringent controls over the securities market, in New South Wales, are contained in legislation which was out. lined in the State Parliament. Short selling, which is allowed on the Sydney Stock Exchange but banned in Melbourne, led to a crisis recently when Senate share investigators heard that it had resulted in the sale of more shares in a mineral company than actually existed.

The Security Industries Amendment Bill provides a fine of $2OOO, or six months gaol for a first short-selling offence, with a fine of $4OOO, and two years gaol for subsequent offences. The New South Wales Attorney General (Mr Kenneth McCaw) told the Legislative Assembly that recent sensational situations which had occurred in two stocks listed on the Sydney Stock Ex-

change, had prompted the severe penalties. “In recent months there has been a growth in public uneasiness surrounding the securities industry stemming from suspected or apparent inside dealing and other manipulations of the market,” he said.

The new legislation also sets up a Commission for Corporate Affairs (C.C.A.) which will supervise the conduct of the stock market and control the licensing of people connected with the securities industry. The New South Wales registrar of companies will be known as the Commissioner for Corporate Affairs m future.

The commission, which is responsible to the AttorneyGeneral, will have the power to require dealers to disclose the names of buyers or sellers and their instructions on the sale of securities. “This will be the chief weapon used by the Commission in making preliminary investigations into unusual movements in the prices of securities on the stock market,” Mr McCaw said. The Commission will have the general power to make investigations where it has reason to suspect that some offence may have been committed. It may apply for a Supreme Court order to inspect the books of a dealer or investment adviser. Mr McCaw said that this would mean that the Commission would take over the duties now exercised primarily by the police in general fraud work, but there would be appropriate cooperation between the police, and the Commission. Journalists working in the finance sections of newspapers will have to keep a register of their share-hold-ings under the new legislation, and changes must be notified within 14 days. The penalty for failing to do so is $lOOO.