Perth stockbroking firm Hartleys has been fined $80,000 by the ASX for placing an order for Broad Investment shares that potentially created a misleading price.
Perth stockbroking firm Hartleys has been fined $80,000 by the ASX for placing an order for Broad Investment shares that potentially created a misleading price.
A Hartleys broker placed an order for 1 million Broad Investment shares at .002 cents, when the market for the shares was at .001 cents - an order the ASX tribunal has decided Hartleys should have suspected as intending to manipulate the market.
Full announcement below:
The ASX Disciplinary Tribunal has determined the following:
Hartleys Limited contravened ASX Market Rule 13.4.1(b)(iii) in that it made a bid for and dealt in the ordinary fully paid shares of Broad Investments Limited ('BRO') where, taking into account the circumstances of the order, Hartleys ought reasonably to have suspected that the order may have been placed with the intention of creating a false or misleading appearance with respect to the price of BRO.
Hartleys did not contest the contravention before the Tribunal.
For this contravention the Tribunal imposed a fine of $80,000 (plus GST).
Circumstances of the contravention:
In early 2008 Opes Prime went into voluntary administration and subsequently went
into liquidation on 15 October 2008. Through a series of creditors meetings and court
hearings, it was resolved that the value of claims by certain creditors of Opes Prime
would be determined by reference to the closing price of their securities with Opes
Prime as at the close of trading on 16 October 2008.
"There are up to 1,000 securities listed on ASX which may affect the interests of Opes Prime clients. Many of them are relatively illiquid and, as such, are susceptible to market manipulation.
A list of the securities is attached (Attached List).
ASX requests Market Participants to be alert to any orders placed near the close on 16 October 2008 which will increase the price of any of the securities on the Attached List when executed.
Market Participant which receives such orders should consider whether the client is seeking to fix a higher closing price for that day.
Market Participants should be particularly alert to small volume, small value buy Orders which, when executed will increase the price of any of the Products in the Attached List on 16 October 2008. If Market Participants receive such unusual orders near the close on 16 October 2008, they should consider specifically querying their client as to whether they have an interest in a higher closing price in the relevant [securities]".
At approximately 16:04 on 16 October 2008, during the closing single price auction, a client of Hartleys placed a Bid for 1,000,000 BRO at up to $0.002. Shortly thereafter, following consideration of the Bid by a Hartleys Designated Trading Representative, Hartleys placed the order in the market at $0.002. Immediately prior to Hartleys placing the Bid, the market for BRO was $0.001/$0.002/$0.001 (Bid/Ask/Last).
The last sale price for BRO was $0.001.
At 16:10:25 in the CSPA the Bid matched with relevant Offers, resulting in a market transaction for 1,000,000 BRO at $0.002.
The effect of this transaction was that the closing price of BRO was $0.002, compared with the previous last sale price of $0.001 (an increase of 100%).
Although Hartleys contended that it did not suspect that the client had placed the Bid with any intention of manipulating the market, the Tribunal determined that the circumstances were such that Hartleys ought reasonably have suspected that the client may have placed the Bid with such an intention and should not have placed the Bid without further enquiry to ascertain the client's intention.
For this contravention the Tribunal imposed a total fine of $80,000 (plus GST).
