DPP (Cth) v JM [2013] HCA 30: Share Market Manipulation

Today (27 June 2013) in the case of DPP (Cth) v JM [2013] HCA 30, the High Court unanimously held that buying or selling shares on the securities exchange operated by ASX Limited, for the sole or dominant purpose of creating or maintaining a particular price falls under the offence of market manipulation under s 1041A of the Corporations Act 2001 (Cth).

The Facts

The respondent, JM, has been brought before the court on 39 counts of market manipulation contrary to s 1041A of the Act and two counts of conspiring with others to commit market manipulation in relation to the trading of shares on the ASX.  JM has pleaded not guilty to all charges.

The Previous Case History

Before a jury was empanelled, Weinberg JA, sitting in the Trial Division of the Supreme Court of Victoria, stated a case under s 302 of the Criminal Procedure Act 2009 (Vic) and reserved three questions of law for the Court of Appeal.

The questions asked whether the price of a share on the ASX, which had been created or maintained by a transaction carried out for the sole or dominant purpose of creating or maintaining a particular price for the share, was an "artificial price" for the purposes of s 1041A of the Act.

The Court of Appeal held, by majority, that the original questions formulated by Weinberg JA were inappropriate to answer because they were answerable only by reference to disputed facts.

The High Court

The CDPP sought special leave to appeal to the High Court against the orders made by the Court of Appeal, alleging that the answer given to the reformulated question was founded on a misconstruction of s 1041A of the Act.  JM sought special leave to cross-appeal to argue that both the original and reformulated questions were hypothetical questions and that to answer the questions was beyond the judicial power of the Commonwealth.

The High Court granted both applications for special leave.

The Court held that the original question should have been answered by the Court of Appeal, but that the reformulated question was not a question which arose before JM's trial.  The construction of s 1041A of the Act adopted by the Court of Appeal was held to be incorrect. 

The High Court held the price of a share on the ASX created or maintained by a transaction on the ASX that was carried out for the sole or dominant purpose of creating or maintaining a particular price was an "artificial price" for the purposes of s 1041A.

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