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Law Notes Securities and Financial Services Regulation Notes

Securities And Financial Services Regulation Super Summaries Notes

Updated Securities And Financial Services Regulation Super Summaries Notes

Securities and Financial Services Regulation Notes

Securities and Financial Services Regulation

Approximately 294 pages

A 204 page bible of detailed cases and materials summaries, super summaries ideal for open book exam use and a rights/remedies map.

Please be aware that the FOFA legislation has gone through substantial revisions and continues to be modified - some of the material contained in these documents regarding FOFA may be out of date.

Structure of the cases and materials summaries:
Class 1 - Introduction
Class 2 - What is 'regulation'
Class 3-6: How are we regulating (Generally, Disclosure to Re...

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The following is a more accessible plain text extract of the PDF sample above, taken from our Securities and Financial Services Regulation Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Core obligations of an AFSL Holder

Legislation Concepts Key Cases Comments
S 912(a) – Efficiently, honestly and fairly

  • The ultimate question is whether the appellant’s performance of their functions fell short of the reasonable standard of performance the public is entitled to expect of the licensee (Story v NCSC) and the standard encompasses conduct which isn't criminal but morally wrong in a commercial sense (RJ Elrington)

    • [Not a breach] Isolated failure to adhere to a net tangible assets condition (RJ Elrington)

    • [Breach] Providing investment advice in a position of a conflict of interest (RJ Elrington)

    • [Breach] Failure to diligently transition a prescribed interest scheme to comply with MIS investments regime and properly informing investors about it (Re Koala Hydroponics)

    • [Breach] ARs failure to make inquiries as to the merits of an investment promising absurdly higher returns and simply relying on other’s information to promote it (Re Foster v ASIC)

    • [Breach] ARs failure to have a reasonable basis for a securities recommendation (Re Campbell v ASIC)

    • [Breach[ Failure to disclose matters relevantly to a recommendation in breach of the FSG disclosure requirements (Re Jungstedt v ASIC)
S 961 – Best interests obligation to retail clients

  • **[Content of obligations] S 961B This is satisfied if the provider has done each of the following:

    • (a) Identified the objectives, financial situation and needs of the client that were disclosed to the provider by the client through instructions

    • (b) Identified:

      • (i) The subject matter of the advice that has been sought by the client (explicitly or implicitly) and

      • (ii) The objectives, financial situation and needs of the client that would be reasonably considered as relevant to advice sought on that subject matter (client’s relevant circumstance)

    • (c) Where it was reasonably apparent that information relating to the client’s relevant circumstances was incomplete/inaccurate, made reasonable inquiries to obtain complete and accurate information

      • (i) S 961C – reasonably apparent: apparent to a person with a reasonable level of expertise in the s.m. of the advice sought, exercising care and objectively assessing information

    • (d) Assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice

    • (e) If, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a FP:

      • (i) Conducted a reasonable investigation into the FP that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to advice on that subject matter; and

      • (ii) Assessed the information gathered in the investigation

    • (f) Based all judgments in advising the client on the client’s relevant circumstances

    • (g) Taken any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances

  • **[Appropriateness] s 961G – The advice must only be provided if it would be reasonable to conclude the advice is appropriate

  • **[Warnings] S 961H – If advice is based on incomplete/accurate information a warning must be given at the same time and through same means the advice was provided

  • **[Priority in COI] s 961J – If any FSL or AR of them has a conflict between their interests and that of the client, they must give priority to the client’s interest

  • [Auxiliary provisions]

    • [Civil Penalty Provisions] These ** are all CPPs under s 961K for an AFSL and s 961Q for an AR (unless the AR reasonably relied on information/instructions given by the FSL s 961Q(2))

    • [Compliance by ARs] s 961L – FSL must take reasonable steps to ensure ARs comply with the above **

    • [Compensation actions] s 961M(1); s 961M(3) gives standing to apply to the client to get, compensation from the FSL (s 961M(2)) including profits (s 961M(4))
Definition of Financial Product

“a facility through or through the acquisition of with a person” (s 763A) does one of three prescribed actions

Facility – includes a CAU or a scheme (s 761A, s 762C)
Makes a financial investment – s 763B Manages a Financial Risk – s 763C Makes non-cash payments – s 763D

  • [Requirements]

    • (1) Giving money or money’s worth to

    • (2) another who uses it to generate a financial return/benefit or intends to do so

    • (3) The absence of pooling or day-to-day control over the use of the contribution

  • [Examples]

    • Shares/debentures/MIS interests/Super trusts/LI

    • Depositing money with a ADI

    • [Not] Real property, bullion, active day-to-day control of investments

  • [Requirements]

    • (1) Managing financial consequences of circumstances happening OR

    • (2) Avoiding/limiting the financial consequences of fluctuations in the value of receipts/costs (e.g. prices)

  • [Examples]

    • Insurance, futures, swaps

    • A litigation funding arrangement (Chameleon Mining)

    • Pre-paid service contracts, warranty arrangements (Barclay v ASIC – but see s 763E)

    • [Not] Employing a theft security firm

  • [Requirements]

    • (1) Making or causing payments to be made

    • (2) Otherwise than by physical delivery of currency

  • [Examples]

    • Making payments through a facility for direct debit, deposit account

    • Making payments by traveller’s cheques

  • [Express exclusions]

    • Provision of credit by a TP (e.g. a CC) – reg 7.1.06

    • Money orders by AU post, telegraphic transfers, intl. money transfers (reg 7.1.07F-G)

    • Facilities through which payments can only be made to one person (s 763D(2)(a)(i) – e.g. gift cards)
Incidental Financial Products – s 763E Express inclusions Express exclusions

  • [Requirements]

    • (1) An incidental component of a facility with other components

    • (2) The main purpose of the components or facilities as a whole isn’t a financial product purpose (above 3)

  • [Examples]

    • Could include warranties and pre-paid service contracts (incidental to purchase/sale – Barclay v...

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