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ASIC V Vizard

  0 Downloads   |   9 Pages 2,226 Words   |   Published Date: 05/03/2018

Question:

Discuss about the ASIC v Vizard.
 
 

Answer:

Introduction:

On 4th July 2005  ASIC proclaimed that public penalty actions in the  Court for the case filled against Steve Vizard. ASIC voiced that Vizard was liable to breach as he circulated important corporate information as a director of the company and it resulted gain for anyone may b for himself or for another parties.. ASIC also communicated that across the span  of  March  to July 2000,  Steve Vizard used  Telstra’s secret  information  while he was engaged in trading  the shares of three big listed companies  namely Sausage, Computer share and  Keycorp. In the media release ASIC was actually wanting informations and legal tenders related with this three issues:

  • Proper statements that Vizard has breached the provisionsof Law  on three distinct events by using material or evidences of the directorship of the company he possess.
  • Penalties that must be inculcated on him for infringement or contravention of the rules and priovisions
  • A disqualification that must be ordered to him for being a director in any companies for some years due to prohibition of law and not following them intentionally.
 

Facts of the Case

Mr Vizard  held the non-executive directorial post of Telstra Corporation Limited. With this designation he has the ownership of the company called Creative Technology Investments Pty Limited ( CTI ) and the accountant appointed as the director and the holder of shares of the company.MrVizard with his family consisting of his wife and children was holding the shares of Brigham Pty Limited. Later on Brigham Made loans to his company(CTI) from the resources made by Mr Vizard or some related parties associated with him .It was a clear intention to divert the money and also the profits earned from  the shares of CTI. This profit was spilted up and distributed between Bringham and CTI in the ratio of 90% and 10% respectively. During December 1999,  Steve Vizard delivered $1 million to Bringham and to  his own company .With the loan Brigham thought of purchasing the share portfolio.With these transactions Vizard gained private information as a director of the company Telstra ,and he found that the transaction would keep him gainaable(Ian, 2000).

First, Telstra detained a tactical stake of around 10 % in Sausage Software Limited and Solution 6 Holdings Limited. A personal discussions between Telstra, Solution 6 and Sausage took place regarding  an imaginable merger of Solution 6, Sausage Software and the attainment by Telstra of a significant concern in the amalgamated entity (the Solution 6 transaction).  Then emails were sent to BOD including  Steve Vizard  in respect to the planned Solution 6 transaction. It was sure that when the merger become known to people then the share price of the targeted company would increase. Mr SteveVizard inculcated Mr Lay to purchase shares in the Sausage Software Ltd. The share price of Sausage software has risen significantly and CTI completed an enormous amount of unrealised profit of roughly around $140,000. Izard inculcated Mr Lay to exchange the shares just after seven days of  the announcement and a small amount of shares were exchanged at a profit. Then CIT made a loss and the share price of sausage was lowered down.. Due to this the technology so prevailing crashed, CTI lost $150,720 on the trading of SS(Lawteacher)

The next was that CTI bought shares of Computer share limited. Telstra was holding some ownership of about 15% in computer share. Justice Finkelstein jotted that the CEO of Telstra informed the directors that it desired to nurture funds for the transaction of the Solution 6 company, and that it would do so by the auction of Telstra's stake in Computershare. Mr Vizard had thing  in his mind that  the with sale of Computer shares share would obviously make a fall of price of the shares and then VIzard advised Lays to sell shares on which the CTI would make a profit. Telstra on 13th day of July, 2000, in an public announcement declared their motive to sell their shares. Later on Telstra made the statement regarding its divestment of its shares in Computershare, and the market price of Computershare's securities fell, but then it \gained maintained the same level.

The next transaction was  an acquisition by Telstra of an concern in Keycorp Limited. Justice Finklestein J saw that the Telstra CEO advised the directors to acquire some percentage of shares in Keycorp, It would lead to rise in price and then Mr Vizard advised Mr Lay to acquire a number of Keycorp shares. The price would increase by this and the plan of ultimately selling off the shares of Mr Lay and realise profit would be succeeded.  The total amount of profit in CTI’s hand was $38,364. It still nearly has 15,937 number of KC shares with them which worth $1.68 only.

 

Legal Issues

After the case, it is seen that the director should disclose private confidential information to avail any benefits. Mr.Vizard  was owing the directorship of Telstra, and by obtaining fraudulent means of his position he made improper news and he advised other people to buy or sell share and he imparted speculations based on the information. This fraudulent use of the information made CTI to have an advantage and through thecompany.The  other factor Court have come to an conclusion that  General discouragement of conduct should be measured in commanding penalties. The second issue was that the lack of the profit was because due to deterioration in the worth of share market.A 'reduction' in penalties is suitable if there has been initial greeting of wrongdoing and teamwork with the regulator. ASIC submitted that the appropriate penalty for each contravention was $130,000. The court ordered that Mr Vizard pay penalties for $390,000, but also saw that higher penalty would not affect so much. Importantly, Impartiality Finkelstein well-known that the existing extreme penalty amount of $200,000 for each breaking had been in place for more than 13 years and may involvecharge by Parliament. Penalties for breach of 183(1) were monetary penalties of up to $200,000 for each breach and an order of prohibition in the administrative field as long as the court governs. The ASIC There would also have been compensation for any loss that would have been suffered; there would be criminal liability if there had been any dishonesty anddeclaration of a contravention s 1317E (David, 2005).

 

Decision of the court

Mr. Finklestein J on 28th of July,  conveyed his judgment regarding the consequences that are  to be imposed on Vizard. S 183(1) of the Act tells that a person who gets information because they are, or have been, a director or other officer or associate of a corporation must not improperly use the evidence to:

  • A possible increase for himself
  • gain some improvement for someone else or;
  • have impairment to the enterprise

It just says that a person who actually gain any information because they have been in any higher position of the company must not use them to cheat people or the company. The information must not be actually circulatedas if in the case he obtained corporate information while being the director of Telstra. In crux, we can say that Vizard used evidences and information that he obtained through his position as a director of Telstra to buy shares in three IT companies which Telstra had also expressed interest in. Vizard self-proclaimed the fissure and was called a civil penalty of $390,000($130000 for each breach)Section 283 and 183 is said to be prohibiting conduct which was not so demanding and serious. He was also disqualifies for being a director for 10 years for any companies. There would also have been compensation for any loss that would have been suffered, there would be criminal liability if there would have been any dishonesty.  Finklestein J  through his judgement identified four major  punishing principles - general prevention, personal discouragement, reintegration and vengeance. However, on other hand the court stated that whenever a perpetrator recognises crime and cooperates, then it results in a reduction  or   lessening in fine. The Judge has minutely seen the case of Vizard  and was very critical of Vizard’s action ,both ASIC and Vizard were deceitful and a gross break of trust” and that Vizard knew that what he was actually doing and he knew that was not correct. Vizard’s “breach of trust was carefully covered and only revealed by coincidental”, “everything was done for personal improvement” and it was “only due to of the notions of the marketplace that the respondent was not able to have undue advantage.We can say that Vizard was not help as criminal and was not proscecuted.In crux, we can say that Vizard used evidences and information that he obtained through his position as a director of Telstra to buy shares in three IT companies which Telstra had also expressed interest in. The maximum penalty would have been $600000 that is $20000 for each breach of three contracts. The Judge went by the ASIC submission  but he also as a Judge took independent decision in doubling the ASIC’s suggested penalty of a 5 year banning order and in its place imposed a banning order of 10 years (Sarah, 2015).

 

Conclusion:

In the end we see that ASIC’s repute has agonised harm because of wide fluctuating and widespread disapproval of its activities. More than the lessons that we can uderstnad from Vizard case, there are more lessons or teachings to ASIC .They made two miscalculations in their press release  as announced on 4th July 2005. The news was lacking in relation of  the evidence that was not disclosed Firstly no remark of the vital role played by the DPP. It’s the DPP, who made a sovereign appraisal of the results of ASIC’s examination of Vizard’s portfolio of  trades and moulded the opinion that there was dearth of evidence to highlight an unlawful action and activities taken up during trading  by the insider. The media was not provided with this information.  Second, the publications in the media  was devoid of any information  regarding the legal options that were offered to ASIC and the DPP for carrying implementation action against Vizard. There were powerful media and public compression on DPP and the ASIC to focus and bring into limelight their decision creation in respect to the Vizard  issue, on 28th July.  A press release was published by the DPP. Much incorrect information was circulated in the media, which wade ASIC opinion critical, and it brought disrepute to them in large ways. It was very much considered that Vizard case was a case of insider trading and Vizard was liable to prosecution yet the media released the opposite. At the end it can only be said that ASIC would have defended criticism only when true facts would have revealed in the begining.The DPP completed a sovereign appraisal of the reverbration of ASIC’s examination of  SteveVizard’s share of  trades and moulded the opinion that there was lacking evidence to bring a unlawful action for insider trading The Judged just doubled the banning  and we could easily see that ASIC has just overlooked Vizard’s case and took it at a lighter way.The Judge connoted Steve Vizard’s actions in analysing the Telstra evidence as “dishonest”. The evidence which has been used would actually give us the way whether it is liable to criminal proceeding or civil. The DPP media clearly stated that the case of Vizard was not a case of prosecution where in general it was.A law restructuring was needed  It was a case of insider trading which was so evitable by just having a look in the case. The Judge then observed that the penalty which was imposed was not accurate and was insufficient in respect of the case and the  Parliament should have full authority to increase the same and the Judge was sure that the Government would consider the same. The Judge and the people have also bought some major points that the case, which was delegated to ASIC, was being considered by ASIC and should not be delegated to any of the proceedings to evaluate (Ramsay, 2000).

 

References

Jacobson, D. (2005).Asic v VIzard.Retrieved 27 November2016  fromhttps://www.brightlaw.com.au/asic-v-vizard/

Bartholomeusz, S. (2015).Directors Duty in focus.Retrieved 27 November2016  fromhttp://youlegal.com.au/directors-duties-focus-improper-use-information/

Ramsay, I. (2000).Steve Vizard, Insider Trading and Directors’ Duties.Retrieved 27 November2016from http://law.unimelb.edu.au/__data/assets_file/0004/1709905/90-Steve_Vizard__insider_trading_and_directors__duties1

Doube, B. .Directors Duties: Know What You’re Doing!.Retrieved 27 November 2016  fromhttp://www.bdl.com.au/commercial-business-law/directors-duties-know-what-youre-doing.html

Linklaters (2005).Litigation and Dispute Resolution.Retrieved 27 November2016  fromhttp://www.allens.com.au/pubs/ldr/foclaug05.html

Law teacher (2005).Director Duties.Retrieved 27 November2016  fromhttp://www.lawteacher.net/free-law-essays/business-law/director-duties-in-asic-v-adler-business-law-essay.php

Hardle, J . (2014).Australian Civilpenaltie regime. Retrieved 27 November2016  fromhttp://www.unswlawjournal.unsw.edu.au/sites/default/files/comino_371

Law teacher (2005).Director Duties.Retrieved 27 November2016  fromhttp://www.lawteacher.net/free-law-essays/business-law/director-duties-in-asic-v-adler-business-law-essay.php

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