Question

Septimus was the seventh born child in his family; that is why he was called Septimus - which comes from the Latin word for 'seventh.' Despite the fact he had a numerical name, Septimus hated Hip Hop artists because so many of them appeared to be named after numbers (eg 50 Cent).

Because of his love of classical music, Septimus worked in the record indust1y as a company director for a recording company, My Masters Voice Ltd (or MMV Ltd). MMV Ltd specialized in recording classical music with a twist ( eg electric violin artists).

October 2013 proved to be a newsworthy month for Septimus and MMV. First, Septimus received a confidential report that MMV was going to merge with the leading recording company on earth, Mowertown. On hearing that news, Septimus purchased further shares in MMV and Mower-town. He purchased these shares in his own name. Secondly, at a Halloween party, one of the artists who records with MMV said to Septimus: "I'm really happy, the motor company my dad works for - Four Wheels are Better than None Ltd - is about to be cleared by a government enquiry - it turns out their quad-bike wasn't designed badly, after all. But please do not tell anyone I told you." Septimus subsequently bought shares in Four Wheels are Better than None. Finally, Septimus read an article in the No Idea Magazine that said smart investors were now buying shares in garden supply companies. Septimus went out and bought gardening shares.

(a) ASIC is now investigating Septimus' share purchases. They seek your advice on whether his three purchases have breached the Corporations Act. Advise ASIC giving legal reasons.

(b) One work experience cadet at ASIC learns about the Septimus matter and says: "The law relating to this matter is confusing. I am not sure whether Septimus' share purchases are governed by directors' duties or some other part of the Corporations Act. Also, even if he pleads guilty, I cannot make any sense out of the principles courts apply when sentencing offenders. I think the law is soft on white collar crime." Do you agree? Discuss this statement and in so doing, explain the relevant (white collar crime) sentencing principles to the cadet. Are you aware of other problems ASIC has had in white collar crime law suits? If so, discuss them.

(c) Imagine the above facts slightly change. First, instead of buying shares in Mower-town in his own name, Septimus instructs his accountant to buy the shares using a family company. Might that change the sections under which ASIC prosecutes Septimus? Why?

(d) Finally, imagine the facts change again. This time, instead of buying shares, Septimus makes a statement to the stock exchange which he knows is incorrect. When ASIC read the minutes of one directors' meeting, they find evidence that Septimus must have known the true situation. When confronted with this evidence by ASIC, Septimus simply says: "Well, the minute taker must have got it wrong." What are Septimus' prospects of success?

Answer 1