Poidevin and Australian Securities and Investments Commission

The case involved an appeal by Mr. Poidevin and Mr. Rodr against banning orders made by the Australian Securities and Investments Commission (ASIC). The dispute concerned allegations of market manipulation in relation to trading in DirectMoney shares over a nine-day period. ASIC contended that the applicants' transactions were likely to have had the effect of creating an artificial price for trading in a financial product on a financial market, contrary to section 1041A of the *Corporations Act 2001* (Cth). The primary issue before the court was whether the applicants had contravened this provision and, consequently, whether ASIC had reason to believe that Mr. Rodr was likely to contravene a financial services law, thereby enlivening the power to make banning orders under section 920A(1)(f) of the Act.

The court was required to determine the meaning of "transaction" within section 1041A and whether the applicants' actions had the sole or dominant purpose of setting or maintaining the price for shares. Furthermore, the court considered the meaning of "take part in or carry out" in the context of the alleged contraventions. The evidentiary standard for findings of serious contravention, including market misconduct, was also a consideration, with the court noting that such findings must be based on cogent and reliable evidence. The court also examined the application of the rule in *Jones v Dunkel* and the circumstances in which adverse inferences could be drawn from a failure to call witnesses or from prior inconsistent statements.

In its reasoning, the court accepted ASIC's analysis of the relevant transactions, finding that the dominant purpose of Mr. Rodr's transactions was to set or maintain the price of DirectMoney shares at a particular level. Consequently, the court was satisfied that Mr. Rodr carried out transactions that had the effect of creating and maintaining an artificial price, contrary to section 1041A. While acknowledging that Mr. Rodr did not attend the hearing, the court found that his conduct was repeated over the relevant period and that there was no evidence to indicate he had addressed his conduct or accepted responsibility, apart from undertaking training. This led the court to be satisfied that ASIC had reason to believe Mr. Rodr was likely to contravene a financial services law.

The court found that Mr. Rodr had not complied with a financial services law and that ASIC had reason to believe he was likely to contravene a financial services law, thus enlivening ASIC's power to make a banning order against him. The proceedings were to be listed for directions and a further hearing on the remaining matters requiring determination.