Director of Public Prosecutions (Cth) v JM

The High Court of Australia considered an appeal and cross-appeal concerning charges of market manipulation under section 1041A of the *Corporations Act 2001* (Cth). The Director of Public Prosecutions (Cth) brought charges against JM, alleging that JM engaged in transactions that created or maintained an "artificial price" for shares on the Australian Securities Exchange (ASX). The case came before the High Court following a referral of questions of law by a judge of the Supreme Court of Victoria to the Court of Appeal, which had then reformulated those questions.

The central legal issues before the High Court were the meaning of "artificial price" within the context of section 1041A of the *Corporations Act*, and whether the interpretation of this term should be informed by United States legal concepts such as "cornering" and "squeezing." The Court was also required to determine whether the questions of law referred to the Court of Appeal were hypothetical, given that the facts relied upon by the prosecution had not yet been admitted or proven at trial.

The High Court held that the meaning of "artificial price" in section 1041A is not confined to conduct typified by the US concepts of "cornering" and "squeezing," nor is it limited to situations where a dominant market participant exercises market power. Instead, the Court found that a transaction carried out for the sole or dominant purpose of creating or maintaining a particular price for a share on the ASX constitutes an "artificial price" for the purposes of the section. The Court reasoned that proof of such a purpose is one way of demonstrating that the impugned transaction was at least likely to have the effect of setting or maintaining an artificial price. Consequently, the High Court allowed the appeal and the cross-appeal in part, setting aside the orders of the Court of Appeal and answering the reserved questions in favour of the prosecution.