A New Challenge to Securities Regulation: Dissemination of Information on the Internet



Synopsis

In the pass few years the world has witnessed the exponential growth of the internet and information technologies. On the bright side the society will receive numerous benefits that include better access to information, enhance ability to share ideas. Coincidentally, these very benefits are what securities regulations have long tried to achieve. In other words, such technologies have the potential to enhance the dissemination of information and hence improve efficiency in the securities industry. However, as with most thing, for every bright side there is a negative side. The nature of the technologies also raises some concerns. Two such concerns in the context of securities industry are (a) the erosion of the regulatory framework due to more direct access to the market and information, and (b) the ease and threat of market manipulation through dissemination of false information on the internet.

After looking at the relevant laws in Australia, this paper comes to the conclusion that the current securities regulation regime is adequate. This said, it is submitted that a more international approach to the potential problems caused by the new technologies is highly desirable. Further it is stressed that any changes need to proceed with caution: attempt to tackle the problems must not undermine the potential benefits of this new medium.


Table of Contents


Introduction

The information revolution that has been transforming telecommunication is occurring at an unrelenting and unprecedented pace. Driven by increasing PC penetration in society, this revolution has gone "global overnight".[1] In Australia a substantial number of household possesses computer, with internet access following closely behind. Judging from current estimate and growth, as much as one billion people worldwide may be connected to the internet by the turn of the century.[2] However, despite the millions of dollars that have been poured into the information infrastructure, the nature of the technology is little understood by most people.[3] An obvious danger is that in this climate of ignorance people are more susceptible to exploitation.

What have all these to do with a paper on securities regulation?

Everything.[4] Take this scenario for instance: An individual placed on his or her own World Wide Web (WWW) page some information pertaining to a particular listed company. He also put forth his own opinion about that particular company. The information placed on the WWW is in fact false. Some web users seeing the information, however, naively did believe in it and bought some shares based on that information.

This is a very simple scenario, one that is very likely to happen, if not already happening.[5] These activities raised the question: what are the legal consequences under the current securities regulation regime? In particular, whether the current securities regulations under the Corporations Law are adequate to meet the change cause by the internet and information technology?

This paper endeavours to explore these questions. The above scenario forms the part if the factual matrix behind the discussion in this paper. Part I provides an outline of the technology involved and introduces some of the relevant issues. In part II some of the applicable laws are examined. The focus is on whether, and if so the manner in which, the law applies to the scenario. After looking at the applicable laws, the pragmatic problems encountered in the application of the law is canvassed in part III. In light of this discussion, the paper comes to the conclusion in the subsequent parts that no major changes are required, except that a more international approach to the potential problems is highly desirable. In addition, any changes need to proceed with caution having due regard to the potential benefits that this new medium will have on our society.

Background and Key Issues of Relevance

The internet is essentially a `network' of different computers interconnected through a common protocol.[6] The strength and versatility of this network are all due to the open nature of this protocol, which permits any computers, whether large or small, to be connected directly to this network. This forms the backbone of modern information technology.[7]

Many modes of communication are available on the internet such as electronic mail (e-mail), electronic file transfer (FTP), newsgroup channels for discussion and exchange of ideas, gopher and more recently the World Wide Web (WWW). It is this WWW that is the most prominent, and thus is the focus of the discussion in this paper.[8] WWW basically utilises a set of protocols to facilitate the storing, presentation, and retrieval of information that include text, sound, graphics and video.[9]

This new information medium offers much potential that is of benefit to society.[10] The impacts on the securities industry are also bound to be significant.[11] Such technology could affect the securities industries on two levels:[12]

(i) Functional level- the use of technology to assist in the giving of advise, preparation of research and to link international transactions. Some examples of such uses include the electronic filling of returns and information to regulatory agency and the automation of securities trading (eg. the SEATS, STARS).

Online investment resources can provide up-to-the minute information, a range of opinion, instant access to large amounts of data that are historically available only to professionals.[13] In addition, the increased accuracy and speed of the transmission of data and commentary effectively translate to a reduction in the cost of obtaining information and more timely flow of corporate information to the public. And by enlarging the class of person having access to data it improves the assimilation of the data into the price of securities. This increases efficiency,[14] market certainty and confidence.

(ii) Structural or regulatory level- better efficiency and the enhance ability to handle information also encourage the development of new service leading to changes in the institutional structure. There are two dimensions to this.

Erosion of the Role of Intermediaries

Technology may have lower the transaction cost, improve efficiency and foster capital formation, the down-side is that this tends to subsume the role of private intermediaries, which used to ensure informational and transactional efficiency in the market. The advent of the internet has effectively undermined the traditional information vending role of the Stock exchange. Traditionally, "the use of stock exchange signals was tightly controlled by charging a premium", with the service restricted to brokers, institutional investors, finance-news organisations, like Reuter, AAP, Bloomburg.[15] Increasingly people want immediate access to information via the internet. This trends is evidenced by the increasing number of WWW pages devoted to securities related information in Australia and around the world that are not operated by the usual players.[16] Recently, the availability of information is such that the ASX need to reduce the price charged for information feeds to remain competitive.[17]

Also, the intermediaries (the broker-dealer) are in danger of being removed from the matching process. As investors are increasingly able to obtain and organise market information, the services traditionally provided by brokers, financial advisers (the investment intermediaries) becomes redundant.[18] People can gather their own information, buy and sell at will by directly placing their own trading instruction.[19] Indeed, in the US isolated examples of this are already happening.[20] Given that these investment intermediaries perform a regulatory role in our market,[21] and provide an important "buffer" function to isolate the market from people intending to do manipulative trade.[22] Removal of the intermediaries would possibly undermine the regulatory framework.[23]

Opportunities for Unwarranted Activities

The advent of global computerisation and networking introduce new opportunities to commit misdeeds. A common concern is security. The open nature of the internet makes it vulnerable to illegal tempering or hacking. Thus, it is possible that someone may access the system, stole confidential information or changed the data.[24] Security breach is not easy to fix,[25] and as it tends to fall within computer fraud[26] this paper is not going to deal with it. The concern of this paper is on a more subtle and deceptive problem: the dissemination of false information via the internet.[27] Such activities can be directed to manipulate the market or to defraud the investors.

The securities market is driven largely by forces of supply and demand where prices are a function of the information available in the market. Thus, any technology that is capable of affecting the quantity and quality of information is bound to have an impact. With computerisation, and the more recent explosive phenomenon of the internet, the securities market is set to face a new challenge. The problem is that with the internet anyone, anywhere in the world, is capable of disseminating information about securities:[28]

"Simply by browsing through a search engine and clicking the mouse at the sight of an intriguing headline, consumers can unwittingly invite the cleverest con artists the world has to offer into their very homes. Literally at the touch of a button, irresistible opportunities and products which exist only in the devious minds of their distant creators, can be pitched on the computer screen of the user."

Moreover, illegal activities conducted through computer is often not that obvious, and much more difficult to detect. Its hidden nature tends to disguise the very real threat that it poses.[29] The essence of the problem is:[30]

"... the appearance that independent third parties are feeding the information in. But there is no guarantee of their independence, so they are susceptible to misuse and abuse."

While there is no currently available statistics regarding the use of the internet to disseminate misleading information about securities, it is highly probable that it is already happening or will happen.[31] The truth is: "If you want to ramp a stock, the Net is a cheap and powerful medium for getting the message out."[32]

An Evaluation: Relationship to Relevant Law

Under the above scenario the person, who set up the web pages containing information relating to the securities market may well be in contravention of the Corporation Laws. First, there are the provisions prohibiting the dissemination of false or misleading information or conduct in Part 7.11 Div 2 of the Corporations Law. The focus of the discussion in this paper is on ss995. The operations of ss999 and 1000 are also outlined. It is acknowledged that ss996, 997, 998 may also be relevant in some circumstance.[33] However, because those sections primarily focus on prospectus and market manipulation in general it is beyond the scope of this paper to canvass. Second, the person may infringe the licencing requirement under in Part 7.3 Div1.

Dissemination of false or misleading information

One general point is that these prohibitions apply to any information that anyone puts on the internet whether the person is carrying on a business or not.

Section 999

More specifically under s999 a person is prohibited from making a statement or disseminating information that is false in a material particular or materially misleading where:

(i) it is likely to induce subscription, sales, purchases of securities, or, change the price of securities;[34] and

(ii) the person does not care whether the statement or information is true or false, or, the person knows or ought reasonably to have known its misleading nature.[35]

It appears that s999 scope is wide enough to cover statement made about securities in general or about particular securities. There is no need for the statement to concern any securities.[36] Also, the criteria noted in (i) above is based on an objective test: whether a reasonable person on hearing the information would have been induced to subscribe for, sell, purchase any securities or alter market prices.[37] Such a test suggests a wide ambit in that it permits any statement to be caught within the provision. Indeed, it is sufficient to show a "potential to induce", or to alter market price.[38]

The ambit is only constricted somewhat by the operation of subsection (c) and (d): the person's state of mind and knowledge. It needs to be established that the person has knowledge that is false in a material particular or materially misleading. Because the question of `materiality' is based on an objective test,[39] and the knowledge can be a constructive one the ambit of the sections remains fairly broad.

Thus, the section could apply to rumour or "hot tip". Indeed, the ASC is of the opinion that it even apply to a person who merely repeat the rumour or "hot tip" on the internet[40]

Alternatively the section applies where it is shown that the person does not care or that the person is making the statement dishonestly. In a sense this is analogous to common law fraud.[41] If this be the case and standard, then once the statement is proved to be misleading, false, deceptive and there is no reasonable ground to believe it, then an inference of fraud may arise.[42]

Thus, it appears that the intention of the person placing the information on the net is very important. This seems sensible. However, to the extend that the section extends to impose a liability in negligence,[43] the scope of the section may be cast a bit too wide insofar that it creates a chilling effect on communication on the net.

Section 1000

Section 1000 prohibits a person from inducing or attempt to induce another to deal in securities by:

(a) making or publishing a statement, promise or forecast that the maker knows to be misleading, false or deceptive;

(b) dishonest concealment of material facts;

(c) recklessly making or publishing (dishonestly or otherwise) statement, promise or forecast that is misleading, false or deceptive;

This apply whether of not the person has honest believe.

As "reckless" is characterise by heedless and reckless', it appears that a person is not in contravention of the section if a reasonable would have drawn the same conclusion based on the given facts.[44]

(d) recording or storing in, or by any means of, any mechanical, electronic or other device information that the person knows to be false in a material particular or materially misleading. An exception is where the person, at that time of storing the information, has no reasonable grounds for expecting that the information would be available to any other person: s1000(3)

Consequently, the essence of the section is to prohibit fraudulent induction of trading in securities. In effect it reinforces and overlaps with section 999. The exception is that under s1000 there is no need to proof that the maker intends to induce because this would only defeat the purpose of the section.[45]

General Catch All Provision: Section 995

In the fussy areas of false and misleading information it is not inconceivable that s999 and s1000 will not catch all illegal activities. Section 995, which is based upon s52 of the Trade Practices Act 1974 (Cth) (hereinafter referred to as TPA), was envisaged as a general catch-all provision for this very purpose.[46] It prohibits a person, in or in connection with any dealing in securities and certain specified activities related to securities, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.[47]

For s995 to apply, it is important to establish that:

(i) the person is somehow connected with "dealing in securities"; and

(ii) the person's conduct is misleading or deceptive.

Dealing in Securities

"Dealing in securities" under section 9 means "acquire, dispose of, subscribe for or underwrite the securities, or make or offer to make or induce or attempt to induce a person to make or to offer to make an agreement (i) for, or with respect to acquiring , disposing of, subscribing for or underwriting the securities; or (ii) the purpose or purported purpose of which is to secure a profit or gain to a person who acquires, disposes of, subscribes for or underwrites the securities or to any of the parties of the agreement in relation to the securities." Of particular relevance here is that it covers the situation where the person "induces" others. In Ryan v Triguboff[48] `induce' is held not to be synonymous with `cause'; induce tends to connote an element of persuasion or influence.[49] Indeed, a personal stake in the outcome of a transaction tends to bring the transaction within the ambit of dealing.[50]

Thus, the question whether a person on the net is dealing in securities would hinge upon whether the language and or graphics used on the Web page constitute some sort of persuasion or influence. It is arguable that if the person is simply making some comments about a particular or a class of securities than the person may not be dealing with securities. However, because of the apparent broad scope of `dealing' under the Corporations Law, the contrary is also contestable.[51]

Conduct that is Misleading or Deceptive

First, there is little doubt that reference to `engaging in conduct' includes the making of a representation. Second, whether the conduct is misleading is to be construed objectively having regard to a notional reasonable person. Under s995 the notional person is possibly a reasonable person about to make a decision on securities.[52] The degree of knowledge possesses by such a person possibly hinges upon the fact of the case. In NRMA,53 involving the dissemination of information in a prospectus sent to member of a motoring association, the relevant category includes people less astute, less intelligent or less well informed than the average member of community because it was found that a majority of members have no experience with shares.

Moreover, as noted in NRMA, silence may also br misleading or deceptive in all the circumstances of the case.[54] Full disclosure may be required:[55]

"...full and fair disclosure of all facts which are material to enable the members to make a properly informed decision, the combination of which is said and which is left unsaid may, depending on the full circumstances, be likely to mislead or deceive the membership."

Of course, it is recognised that it is neither possible nor desirable to disclose every single arguments for and against a particular proposal or opinion. Thus, "[t]he need to make full and fair disclosure must be tempered by the need to present a document that is intelligible to a reasonable members of the class to whom it is directed, and is likely to assist rather than to confuse"[56]

Thus, if NRMA is to be followed, then by analogy a person disseminating information on the net may be required to disclose fully all the material facts to the extend that it is necessary to assist the average internet users in relation to dealings in shares. Given that the internet covers a broad spectrum of the society and will increasing be so, extensive disclosure may be required.

However, it should be noted that in the NRMA case the court is concerned with the conduct of the directors. It is arguable that the comments made hinges upon the premise that director has a fiduciary duty to provide relevant information to the shareholders. Consequently, in a case concerning the dissemination of information via the internet, which can be done by just about anyone, a different standard may apply, unless a fiduciary duty can be found to subsist between the parties.

No Intention Necessary

Unlike s999, there is no need for intention under s995 (as with s52 of TPA): Franser v NRMA[57]. This is essentially a "strict liability" regime.[58]

However, this is not to say that intention is totally irrelevant. First, in relation to a future representation if the representor did not have reasonable grounds for making the representation then an inference is raised that the statement is misleading.[59] Second, where it concerns a "person involved" (ie. not sue as the principal), the person needs to know the fact that makes the conduct misleading or deceptive.

The Role of s52 of TPA

Although the discussion in this paper focus on s995, it should be noted that where s995 failed, the wider scope of s52 of the Trade Practices Act (TPA) could provide an alternate avenue.[60] Indeed, it appears that s52 offers a more attractive source of litigation because:[61]

1. More easy to obtain standing under s52. Under the Corporation remedy is only granted to person who has or may suffer some loss or damage, or in the case of an injunction to a "person whose interests have been, are or would be affected by the conduct". Under the TPA, while the standing for granting of damages is the same as under Corporations Law, s80 of TPA permits "any other person" to seek an injunction- thus, effectively standing is not really a requirement.[62]

2. More defence is available under s995 (for remedy under s1005)then under s52. However, the position is not that clear.

Validity of Disclaimer

A disclaimer is possibly useless under s52 and hence s995.[63] However, on closer examination, while it is clear that it is not possible to rely on exemption clause to exclude or limit the person's liability under these provisions since this would make compliance with the legislation voluntary, which defeats its purpose. But a "disclaimer" that seeks to prevent the liability from arising has a less clear status.[64]

Given the factually orientated approach that seems to be prevailing, there may be occasion where a contemporaneous disclaimer may be effective.[65] If the cases under s52 of the TPA are any guide, then the better view seems to be that where "all the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on... [is not] conduct that is misleading or deceptive."[66]

This obviously raises a potential loophole. If the person under the scenario expressly claimed that the information is not his or her own, which is probably true, and/ or if it includes a disclaimer to the effect that the person does not belief in its truth or falsity, then it is arguable that the person would not be caught. Although this probably would not apply where there is evidence of a deliberate fraud.[67]

The situation change where the alleged misrepresentation is about a future matter (eg. an opinion, prediction). By analogy to s51A of the TPA that had the effect of reducing the scope of any disclaimer,[68] it is arguable that ss765(1), (2) of the Corporations Law had a similar effect. By deeming the statement to be misleading where the person had no reasonable grounds- and this is presumed to be so- for making the representation, the effectiveness of any disclaimer that seek to prevent the creation of such an inference is really doubted.

Breach of Licencing Requirement?

Traditionally, people who give out investment advise as part of their business or deal with securities needs to be licenced. Part 7.3 Div 1 of the Corporations Law requires dealers and investment advisers to holder dealers and investment licence respectively. Logically, there is no reason why the people in the scenario who disseminate information about securities should not be licenced if they fall within the sections. This "if" is, of course, the area of uncertainty.

The legal line of inquiry involves:

1. Whether the person setting up the pages are giving investment advice? Or whether the person is inducing another to buy or sell certain securities?

2. Whether they are carrying on business of giving investment advice?

3. If both are answered affirmatively, then the person needs to be licenced, otherwise the person can be prosecuted by the ASC.

Carrying on a Securities Business

Where the person is carrying on or holding himself or herself out as carrying on a `securities business', the person needs a dealer licence under s780. "Securities business" is defined in s9 3(1) as "a business of dealing in securities". And "deal" is defined in s9, inter alia, as inducing or attempt to induce another to acquire, dispose or subscribe securities. This definition gives s780 a rather large scope.[69] It is highly arguable that the provision of a web page with information on stocks had about it a favour that connotes an attempt to induce. Consequently, the person would need to be licenced provided that the person is carrying on a business.

Giving Investment Advise

A person is not to carry on an investment advice business or hold himself or herself out to be an investment adviser unless he or she is a licensee (ie. where the person holds a dealer's licence or investment adviser licence: ss781, 9) or an exempt investment adviser: s781 Under the Corporations Law, an "Investment advice business" is defined in s77 as "a business of advising other persons about securities', or, a "business in the course of which the person publishes securities report".

So is the person under the scenario conducting an investment advice business? There is no conclusive answer. It is ultimately a question of fact. The ASC tends to be of the view that if someone is giving "hot tip or recommendation" the person may be conducting an investment advice business, while the mere provision of "purely factual information about securities will not constitute investment advice."[70] Although strictly it should be noted that this view has little authoritative or precedential value. In any event, this seems to be the approach adopted by the ASC: recently, an individual Gerry Pauley, who has established a very popular web page containing information on stocks and "tips", was required to get a "dealer's licence" despite that he is not in it to make money and that the page contained a disclaimer saying that he not a financial adviser.[71]

Of course, undoubtedly, if the person expressly holds himself or herself out to be an investment adviser on the web a licence is required.

Carrying on a Business?

In s18 "Carrying on business" is defined to include carrying on business other than for profit or for the profit of the corporate entity. Thus, the fact that the person does not receive any profit or that it is a one off transaction would not negate a finding that the person is carrying on a business. Judicially, carrying on business is interpreted as characterise by conducting "some form of commercial enterprise systematically and regularly with a view to profit."[72] Also, features such as degree of system involved in an undertaking, regularity of transaction of particular kind, motive of profit or not have been held to be relevant consideration in Income Tax cases.[73]

The proviso is that the person is not within the specific exclusion under in s77(3)- 77(8). Most interesting here is the exclusion granted to the activities of publishers and proprietors of publication that include advise on securities (s77(6)), provided that the publication is generally available to the public and that the publication does not have a sole or principle purpose of publishing such investment advise (s77(7)). Thus, this exclusion does not apply to the publication of investment newsletter.[74]

In particular it is noteworthy that s77(6)(b) granted exclusion to `transmission' of investment advise by means of an `information service' that are `generally available to the public'. And `transmission' is defined in s9 as transmission by electric and electromagnetic energy that is broad enough to cover the internet medium. Although the definition in s9 of `Information service' did not expressly cover the internet it is arguable that by construction it is sufficiently broad and flexible to cover it.[75] This construction is supported by the express coverage of "broadcasting service", "an interactive or broadcast videotext or teletext service or a similar service", or, "an online database service or a similar service".

A troublesome question is whether the advise is generally available to the public? Does this mean it has to be free? It is arguable that because in subsection (b) it did not expressly exclude availability via subscription basis only, as in subsection (a), the legislative intention is that it is adequate that the service be available to anyone who demand it. If this be the interpretation that it would cover the internet in that internet access is, at the moment anyway, only possible by `subscription' through an Internet Service Provider.

The implication is that this exclusion would more likely than not operate to exclude the person from the licencing requirement under s780. This is unless the person is foolish enough to (i) somehow exclude the information to only certain members of public, or, (b) create a web page whose sole purpose is the publication of investment advice.[76]

The Practical Dimension

Extraterritorial Implications

The Internet (popularly known as "Cyberspace") is a borderless "virtual" reality brought to life by the connection of computers located throughout the world.

The prohibitions noted above would certainly apply where the person is located in Australia. However, the essence of Cyberspace indicates that this need not be the case. Suppose the person in the scenario resides overseas, but the information is about a stock listed on the ASX or about a class of securities in general? Does it make any difference if he or she uses a server located physically in Australia? What if he is in Australian but he placed the information on an overseas server?

Given the newness of the medium, it is not surprising that there is no authority on such issues. In essence, the answers really depend upon the extend of the exterritorial effect of the relevant provisions in the Corporations Law.

The Exterritorial Ambit of Corporations Law

It has been said that the limit of or the exterritorial effect of the Corporation Law is that of a State law not the Commonwealth because: (i) s7 of the Corporation Act of each State make it clear that CL applies as a state law; and (ii) any attempt by a State to give the CL greater extraterritorial reach than ordinarily available to State law is beyond State constitutional power.[77] However, the so called `federalizing' provisions, such as s29, 31, 34, 35 37 of the Corporation Act of each State raises uncertainty as they can be construed to suggest that the CL is to apply as a Commonwealth law.[78]

Under the liberal interpretation of State power under Union Steamship Co of Australia Pty Ltd v King[79], the High Court held that "within the limits of the grant, the power to make law for the peace, good government of a territory is as ample and plenary as the power possessed by the Imperial Parliament itself."[80] Though the HC also made clear that if the State purports to attach legal consequences to acts, matters or things outside State boundaries a sufficient territorial nexus needs to be established first to bring the law within the ambit of the State power. And it appears that the connection is satisfied even if there is a remote or general nexus.[81]

The Implications

It is arguable that Ch 7 of the Corporations Law is not intended to have extraterritorial application. First, most provisions in Ch 7 regulating securities are silent as to its extraterritorial application.[82] Second, s110D expressly omit mentioning of Ch7 (which tends to give extraterritorial operation to other Chapters).[83] The effect appears to be that "unless contrary intention is expressed in a specified provision of chapter 7, compliance with the provisions of chapter 7 depends upon whether there are sufficient acts or conduct within Australia to attract the application of those provisions."[84]

Thus, if the person is physically in Australia but places the materials in an overseas server, the person would probably be subjected to the Corporations Law simply because he or she is doing the prohibited conducts in Australia. Where an overseas person places the information on an overseas server it appears that the person is not caught by the Corporations Law. The situation becomes less clear cut where a person located overseas place the information in an Australian server. The better view appears to be that the person is outside the Corporations Law. However, it is arguable that because the server is in Australia, the act is in effect done in Australia. It has been suggested that jurisdiction over non-resident cybertortfeasors is established by virtue of the existence of a web-site containing the false or deceptive information.[85]

Thus, the applicability of the law can be rather fussy:[86]

"It's the irrelevance, though, to 'Net users of this concept of "overseas" that poses a threat to our domestic legislation... Our laws controlling the offering of securities may be no match for the free wheeling offerings of international investments over the Internet."

Ultimately, rather than relying on the extraterritorial operations of the law, countries should engage in systematic cooperation and consultation to achieve "harmonisation on a grander scale"[87] This is far better than the current domestic orientated approach and parochial attitude of countries. In fact, a domestic orientated focus is entirely inappropriate for what is essentially a global phenomenon:[88]

"...it is one thing to know what you need to be aware of when you are writing in Australia. It is quite another to be aware of what liability you may be taking up under the laws of another countries if you publish online."

Recourse to The Trade Practices Act

The extraterritorial gap faced by Corporations Law may be addressed by recourse to s52 of the TPA. Because s52 has such a broad scope that it could conceivably apply where the Corporations Law did not. In particular, s6 of the TPA expand the application of s52 to "the conduct of natural persons in trade or commerce which is interstate, between Australia and places outside Australia, with or within territories or which involves ... the use of postal, telegraphic or telephonic services, or which takes place in a radio or television broadcast [emphasis added]."[89] It is application of this latter limb which covers computer linked via modem technologies, the internet, that "has yet to be appreciated."[90] Notice also that this category is expressly supported by a head of Commonwealth power.[91]

Therefore, in theory, s52 could be relied upon. It has, however, been said that the ability to rely on s52 in the place of s995 is "subversive of the more balanced Corporations Law."[92] This view was echoed by the Task Force for the Corporations Law Simplification Program. In November 1995 it issued a paper proposing that dealings in securities be governed by the Corporations Law exclusively and not by s52 of the TPA. It is believed that this approach "ensures an appropriate balance is struck between the rights of investor and the obligations of business".[93] While this may be true in relation to fund raising via prospectus or making of takeover, it is doubtful whether it applies to the dealing in securities in this paper. {????}

Where s52 is relied upon, a more fundamental problem is whether the conduct is "in trade or commerce"? It is well established that this phrase is "intended to cover the whole field in which the nation's trade or commerce is carried on."[94] And it possibly even covers "dealing between persons which contemplates and causes such commerce whether it relates to goods, persons or information. [emphasis added]".[95] Thus, application in the context of the internet is possible. Though one limitation it seems is that it may not cover representation that was not made in the course of carrying on a business.[96] Consequently, it may not apply to an average user of the internet.

Enforcement Difficulties

The fact that applicable law exists, however, does not necessarily mean that the law is obeyed. In the past few years, following the growth in the internet, enforcement activities became more intensify as government struggled to find a means to control this new medium. The news is abound with stories of governments around the world bringing prosecutions against the distribution of pornography, committing of computer crime via the Internet, and unauthorised investment advertising.[97] Despite all these enforcement activities, it is interesting to note that prosecution against dissemination of information in relation to securities market have so far not seen any litigation. But it will happen.[98]

Of course, this fact alone does not mean that there is no problem! One reason for the lack of prosecution, apart from the newness of the medium, is the problem of enforcement.

The Essence of the Problem

In theory, at least, it is true to say that some control over the internet is possible. It is obvious that control can never be absolute just like in real life it is not possible to block the flow of all contraband goods between jurisdiction.[99] However, this new medium of the internet raises new enforcement problems, one that are often insurmountable.

Enforcement in the internet is much more difficult than in real life. Even in a system relying principally on paper, manipulation in the securities market is already difficult to detect.[100] With the increasing reliance on paperless computer system the task of detection becomes that much more complex- there is no audit trail!

The critical point is that the internet is not susceptible to easy control (if any):[101]

"Possibly the reason the Net exists today is that its technical structure does not easily permit central control."

Screening and control become meaningless and impossible when materials can reside anywhere in the world, where thousands of new web sites pop up every day, not to mentioned the ever increasing number of newsgroups, and then there are emails. While it may be possible to exert some control locally (on a server or even geographic level), this does not guarantee that other news groups, web servers elsewhere do not contain false and misleading information. Remember anyone with full internet access can read material from news servers, ftp, WWW sites overseas.

Computer Technology to the Rescue?

It has been suggested that under a system of disclosure via the internet the ASC can use automated computer technologies to monitor the information. It is not too farfetched to extend these programs to search the Web for information about specific securities or securities in general, retrieve it and possibly analyse it.[102] If this approach work it would provide a sound solution to the core problem.

This is however doubtful. While it is one thing to scan the electronic document lodged with the ASC for anomaly or possible breach of law, it is totally different to scan the entire internet given its vast size and constantly changing nature. Sure there are programs called "Spider" that can and do claw through the net to hunt for information.[103] This prima facie suggests that monitoring is possible, but a closer look at the technical aspect raises doubts.

First, even Alta Vista (current the most powerful Spider program and computer system used to catalogue the net) is not instantaneous- a time lag exists. The Spider typically visits a page ever 3 or so days. By contrast, in real life, any dissemination of information will most probably be picked up by the authority relatively sooner.

Second, the reality is that Spider programs do not index all sites or files. Usually it needs to know of the existence of the page first, which is not a significant problem because the person disseminating the information is not likely to kept his or her page secret. What is more important, such program typically conforms to the so called "robot exclusion standard" that basically define the files that the robot can access. This file can be set up by anyone.[104] Effectively, this suggests that the person can "hide" the offending page from the authority. To bypass this problem, it is possible to scan the web manually. But this is impractical and time consuming. Alternatively, the Spider can be programmed to ignore the standard (which is voluntary), but this raises privacy concern.

Identity of the Culprit

For the regulatory agency, like the ASC, to do anything it must be possible to identify the person who places the information. In this simple scenario it is possible to identify the person, but remember that it is possible to disseminate the said information anonymously via the WWW, newsgroup or ftp achieves, etc. It is in these latter situations that problems will occur.

Extend of Liability

There is currently much uncertainty as to the possibility of bringing suit against on-line service providers, who facilitate the transmission of illicit materials. The dissemination of false information about securities raises similar questions. Are the ISPs an accessory as a "person involved"? They should not but the question is debatable.

Is Changes Call for?

Adequacy of the Current Regime

Overall, on its face the securities laws surveyed in this paper seems to be wide enough to encompass the scenario postulated above. However, clearly the nature of this medium has effectively rendered these legislative provisions relatively useless in the face of the enforcement problem. Consequently, even if the materials are breaching the relevant securities regulations, "in most cases there will be no consequences at all" because "the expense and logistical difficulties involved would make such action impractical."[105]

One notable exception is in relation to the operation of s780 and s781 licencing requirement. While it may be difficult to detect or screen possible breach involving false or misleading information, it is far easier to identify a person who gives investment advise or induces the selling or buying of securities. Once the person is licenced more supervisory controlled can be exercised by the ASC. Thus licencing, in situations where it is applicable, could serve as an indirect but effective means to address the potential problem.

How Real is the Problem?

So far the discussion proceeds on an implicit assumption that dissemination of false and misleading information to manipulate the market is a problem. But does this in practice poses any threat to the securities market?

An argument can be put that the market is so efficient nowadays that some false information is unlikely to change the price or do any mischief. Under the efficient market hypothesis the market price will promptly reflect all available material information about the stock. Thus, any attempt to manipulate the market is impractical because in an efficient market any aberration is likely to correct itself so that such activities tend to be "self-deterring", and any attempt to track it down is likely to be so costly as to be not worthwhile.[106]

It is debateable whether the price will change given the presence of such false information. Empirical research is required to settle this question. Anyhow, it is undoubtedly true that some people will be deceived by the information or will act on it. The point is that the presence of the such false information means that someone will be fooled and hence suffered the consequence; they will then lose faith in the market and if this process continues market sentiment will be affected. This is particularly the case where the information is perceived to be from reliable source or from person of great influence in the financial circle.[107] This position is supported by analogy to the fact that analysts who follow a given company and have a high statute can and do have the capacity to influence a significant number of buy-sell decisions in the market.[108]

Some Policy Considerations

It is more than a decade ago that the securities market in Australia began to deregulate. The driving principle behind deregulation is to permit market forces to work more efficiently as the securities market becomes more complex. With the increasing penetration of the internet do we need to re-evaluate this position? Ie. Is it necessary to regulate the market? Is it appropriate?[109]

The Policies

The securities market is said to be a "market for information".[110] In this market the aims of securities regulation laws are:[111] (i) ensuring efficiency; (ii) encourage competition; (iii) provision of information; (iv) defeating fraud and deception; and (v) promoting competence. In the context of the internet these aims remain unchanged.

It is obvious that these aims do compete with one another. Germane to the question in this paper the conflict is one between (i), (iii) and other aims. Ultimately, the precise mix of regulations come down to a question of balance.[112]

Caution Needed

The internet no doubt holds much potential, but it also presents a very powerful mean to perpetrate fraud and deception.[113] Consequently, a powerful urges exist to outlaw such activities, whether through securities laws or other regulations partly in the interest of business ethics and public morality, and partly because it undermines confidence in the integrity of the market.[114]

While some regulations are of course necessary, such regulations should not be too excessive. Attempt to control the flow of information need to be done carefully. The danger is that regulators tend to overreact to the potential problems caused by the new technology. It is important not to hamper the informational benefits of the medium. As an analogy, regards may be had to the US's Communication Decency Act 1996. Its provisions are said to be so harsh and "overly restrictive" that it has the effect of slowing down the development of the internet, as well as infringing upon the right to privacy and free speech.[115]

Similarly, in the securities industry excessive regulation would deny the securities market the benefits that could be derived from this new medium. Bearing in mind that these benefits are also part of the aims of securities regulation: enhancing the flow of information and the efficiency of the market.[116] Regulation and enforcement are costly. Also, the need for almost constant updating of regulations imposes large compliance costs on businesses. Not only are valuable financial resources consumed but it also imposes a negative effect on the dynamic efficiency and structural adjustment.[117]

A Verdict

In summary, any attempt to screen the net for offensive material is not only expensive, it will act to slow down the so called information superhighway. Meanwhile making little in road on the problem. Thus, not only is complete control not possible, attempt to control could itself stifle the development of the net, and deny the public the full benefit of this new medium.

Of course, the fact that absolute control is not possible does not means that the law should not exert some control over the internet. Some regulations are still needed to provide a deterrent effect.

In any event, there is no need to deviate from the deregulated financial market model. If anything needs to be done, as a global phenomenon, more international cooperation is required for any regulation to be truly workable.[118] Also, the use of automated monitoring software is still worthwhile to the extend that it is effective and does not undermine the benefits of the technologies.

Conclusion

The securities market is set to face a new challenge with the advent of the information revolution. There is little doubt that such technologies have much potential to offer society; and in relation to the securities market benefits such as better dissemination of information and enhances efficiency are highly desirable. But the very technologies that are responsible for these benefits also raise some concerns. In this paper, two such concerns in relation to the securities industries are canvassed: namely, the erosion of the regulatory framework because of more direct access to the market and information, and the ease and threat of market manipulation through dissemination of false information on the internet.

After reviewing the applicable securities regulation laws, it was found that the current laws can more or less theoretically stood up to this challenge in the sense that the scope of the law is wide enough. However, on a practical note, the essentially global nature of the internet and the associated jurisdictional and enforcement problems do undermine the strength and effectiveness of any domestic laws. In any event, changes to our current securities law are not really necessary; a more worthwhile approach is to foster international cooperation to establish a more uniform regulatory framework and enforcement procedures. An international problem requires an international solution.

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_______________________________

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___________________________________

[1] Petre, D. "Floored by Future Shock?" (1996) 12 Company Directors 11 at p12. Cf. the industrial revolution that took generations to happen.

[2] In early 1995, Internet connection was available in 180 countries with a total of 30 million users.

[3] Eg. Most directors of company do not understand it. See Petre, D., op. cit.

[4] Indeed, the implications of the rapidly advancing information technology is not restricted to the scenario canvassed in this paper. The far-reaching impact is recognised by ASC. See Australian Securities Commission "Electronic Commerce in the Financial Service Industries: Challenges and Opportunities" (1996), http://www.asc.gov.au/asc/downloads/draft-policy/backinfo.pdf, Australian Securities Commission "Electronic Communication Between Issuers and Investors Under the Corporation Law" (1996), http://www.asc.gov.au/asc/downloads/draft-policy/concept.pdf

[5] At the time of writing of this paper there are already hundreds of sites, mostly US based, that relate to stocks. Typically, they contained price information, but associated information and news in relation to the company are on the rise.

[6] See Horey, J. "How the Internet Work" [1996] October, Australian Net Guide 110.

[7] "Information technology" is a term of art use to describe electronic mechanisms for gathering, storing, retrieving, and transmitting data. Langevoort, D. "Information Technology and The Structure of Securities Regulation" (1985) 98 Harv L R 747 at p747.

[8] Comments made in relation to it would equally be applicable to other modes of communication on the internet.

[9] For the technically minded, this protocol is called the Hyper Text Markup Language (HTML).

[10] Some such benefits are: better and timely access to information or news; facilitation of communications; promote freedom of speech and equality because it provides a level playing field; facilitation of commercial transactions; etc.

[11] Sullivan, C. "A Discussion of the Impact of Information Technology upon the Securities Industry in Australia" (1987) 4 C & S L J 33.

[12] This division is based on materials found in Langevoort, D., op. cit., Sullivan, C., op. cit. and Whelan, A. "Automation Within the Australian Securities and Futures Markets" (1990) 8 C & S L J 37; See also Armson, E. "Market Stabilisation in Australia" (1995) 13 C & S L J 81.

[13] See "ISA Online Investment Guideline" (1996), http://www.isa.net/pubpol/investguides.html

[14] Langevoort, D., op. cit. at p780.

[15] Kennedy, S., op. cit., at p36.

[16] Some such sites in Australia are: Gerry Pauley's Australian Stocks and Shares Weblink village Investor Centre [http://www.wantree.com.au/~tpauleyg/shares.html], Irene Wheaton's Home Page, and Ron Gully's Australia Stock Market Web Page.

[17] Kennedy, S., op. cit., at p36.

[18] Sullivan, C., op. cit. at p41. Lowe, S. "Share Ware" [1996] Wednesday, 30thOctober, The Sydney Morning Herald.

[19] Indeed, with the internet they could bypass the traditional market all together, and in the process sidestep many regulations. A case in point is that of Spring Street Brewing Co., a small New York brewer, who set up two pages, one for buyers and one for sellers, to facilitate the sale of securities between its shareholders and the public. And surprisingly the SEC approved this! See "LegalGate - What's Hot in Securities Law: Online Trade" (1996), http://www.legalgate.com/

[20] Eg. ebroker [http://www.ebroker.com]is the first Virtual stock broker on the internet; and eTrade [http://www.etrade.com] a virtual stock broking group that is gaining increasing recognition- it is rather difficult to resist deal like "free, unlimited quotes, charts and real-time news and pay only $14.95 per trade."

[21] Eg. they aid disclosure to investors and issuers; and simultaneously they provide information to the Commission. Langevoort, D., op. cit.

[22] Langevoort, D., op. cit. at p754-757.

[23] Sullivan, C., op. cit. at p43.

[24] Sullivan, C., op. cit., at p35.

[25] Indeed, just recently the WWW pages of FBI in the US have been hacked into and replaced by a satire of FBI. Though it should be noted that the use of Firewall technology offer a very effective protection against tempering with the private part of the system.

[26] For a description of computer crimes see Reed, C. Computer Law (1990) , Blackstone Press Ltd, Great Britain.

[27] It should be noted that the term market manipulation, despite it widespread usage, has never been satisfactorily defined. A precise definition is not that relevant in this paper; it is sufficient to note that reference to market manipulation in this paper refers to conducts that: (1) interfere with the free play of supply and demand, (2) induce people to trade, or (3) force a security's price to an artificial level.

For an illuminating discussion of the different formulation of market manipulation see Fischel, D. and Ross, D. "Should the Law Prohibit "Manipulation" in Financial Markets?" (1991) 105 Harv L R 503.

[28] "TRANSMISSION JURISDICTION THE ",

http://www.library.law.miami.edu/~cooper/internet.html

Of course, there are also righteous people who put out information to `educate' the public above the potential pitfall; see "ISA Online Investment Guideline" (1996),

http://www.isa.net/pubpol/investguides.html

[29] An analogy may be drawn from the area of computer crimes: it is a phenomenon that tends to elude the authority, the threat of the problem is however real and serious enough for large corporate entities to set aside large sum of money to cover against potential loss. Reed, C., op. cit., at p165-166.

[30] Kennedy, S. "ASC Tries to Bolt the Internet Door" (1996) 18(15) BRW 36 at p40.

[31] This is all the more likely considering that the number of WWW sites devoted to stock related information is on the increase. A list of web sites can be found at:

http://www.cudenver.edu/~cchen/arahant/stocks/html/world.html#info

There are also dozens of newsgroup forum on the topic of stocks. A list of such groups can be found at the following URL: http://nic.zcu.cz/services/news/groups/clari.biz.stocks.report.html

[32] Kennedy, S., op. cit., at p36.

[33] Moreover, where the information given is not generally available, the person may also breach insider trading provisions in Part 7.11 Div 2A of the Corporation Laws.

[34] Section 999(aa),(a), (b)

[35] Section 999(c), (d)

[36] Baxt, R., Ford, H. and Black, A. Securities Industry Law (1996), Butterworths, Australia at p121.

[37] Baxt, R., Ford, H. and Black, A., op. cit., at p121. It seems that opinion evidence from experience person from the securities industry may in introduced: R v Wright [1980] VR 593.

[38] Baxt, R., Ford, H. and Black, A., op. cit., at p121- 122.

[39] Baxt, R., Ford, H. and Black, A., op. cit., at p122.

[40] ASC "Frequently Asked Question About Securities Dealing and Information on the Internet" (1996), http://www.asc.gov.au/asc/downloads/draft-policy/faq.pdf

[41] See Derry v Peek (1889) 14 App Cas 337

[42] R v Mackinnon [1959] 1 QB 150.

[43] As suggested by the authors in Baxt, R., Ford, H. and Black, A., op. cit., at p122.

[44] This point is supported by R v Grunwald [1963] 1 QB 935.

[45] Baxt, R., Ford, H. and Black, A., op. cit., at p123.

[46] Explanatory Memorandum to the Corporations Bill 1988. See 68 at p 827.

[47] In Burswood Management Ltd v AG (Cth) (1990) 94 ALR 220 it was said that "in or in connection with" are words of wide import.

[48] [1976] 1 NSWLR 588.

[49] Baxt, R., Ford, H. and Black, A., op. cit., at p86.

[50] NCSC Practice Note 333, para 17.

[51] See text infra at p18.

[52] Baxt, R., Ford, H. and Black, A., op. cit., at p89. cf. Under s52 of TPA the notional person is that of a reasonable consumers.

53 Fraser & Anor v NRMA Holding Ltd (1995) 13 ACLC 132. Even though the comments in this case are address with respect to s52, the court noted that s52 and s995 covers much the same ground.

[54] See Koeck, W. "The Implication of the NRMA Case- "Between the Scylla of the Whole Truth and the Charybdis of Confusion"?" [1995] Butterworths Corporation Law Bulletin [55], p8.

[55] Fraser & Anor v NRMA Holding Ltd, op. cit., at 143-144.

[56] Ibid.

[57] (1995) 15 ACSR 590 at p603.

[58] See Koeck, W. "The Implication of the NRMA Case- "Between the Scylla of the Whole Truth and the Charybdis of Confusion"?" [1995] Butterworths Corporation Law Bulletin [55].

[59] Section s765(1). The onus of showing reasonableness is on the representator.

[60] Baxt, R., Ford, H. and Black, A., op. cit., at p86. Also, action similar to that under s52 of TPA can be bought under the Fair Trading Act of each State (eg. s42 of NSW Fair Trading Act 1987). The States' Acts have the advantage that is applied to person whether incorporated or not. Harland, D. "Misleading or Deceptive Conduct: the Breadth and Limitations of the Prohibition" (1991) 4 JCL 107 at p107.

[61] Legg, M. "Misleading and Deceptive Conduct in Prospectuses" (1996) 14 C & S L J 47.

[62] Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd [1978] ATPR 40-067; Phelps v Western Mining Corp [1978] ATPR 40-077.

[63] See Baxt, R., Ford, H. and Black, A., op. cit., at p93-94.

[64] Terry , A. "Disclaimers and Deceptive Conduct" (1986) 14 ABLR 478 at p478.

[65] See French , R. "A Lawyer's guide to Misleading or Deceptive Conduct" (1989) 63 ALJ 250 at p261-263.

[66] Yoke v Lucas (1985) 59 ALJR 776 at 777.

[67] Terry , A., op. cit., at p485.

[68] See Terry , A., op. cit., at p488.

[69] See also text infra at p19- 21.

[70] ASC "Frequently Asked Question About Securities Dealing and Information on the Internet" (1996), http://www.asc.gov.au/asc/downloads/draft-policy/faq.pdf

[71] Trueman, J. "Stocks Site Shuts Amid Net Tangles" [1996] Thursday, 31st October, The Sydney Morning Herald .

[72] Hyde v Sullivan (1956) 56 SR(NSW) 113 (full court of Supreme court). In Hungier v Grace (1972) 127 CLR 210 at p217, Barwick CJ also noted that "the word `business' imports the notion of system, repetition and continuity".

[73] Martin v FCT (1953) 90 CLR 470; FCT v St Hubert's Island Pty Ltd (1978) 138 CLR 210 per Jacobs J at 237; Investment & Merchant Finance Co Ltd v FCT (1971) 125 CLR 249 per Barwick CJ at 255.

[74] Baxt, R., Ford, H. and Black, A., op. cit., at p201.

[75] This is clearer that the equivalent sections in the US, which exempt the "publisher of any bona fide newspaper, news magazine or business or financial publication of general or regular circulation." (15 U.S.C. s 80b-2(a)(11)(D)) This focus on traditional media really leaves on-line publishing in limbo. See Kennedy, P. "Publishing on the Internet: Some Legal Projections and Pitfalls" (1995), http://www.gdf.com/net-pub.htm

[76] This is exactly what happen in the example noted in footnote at p

[77] Albrechtsen, J. "Extraterritorial Implications of Australian Securities Law" in Walker, G. and Fisse, B. (ed), Securities Regulation in Australian & New Zealand (1994, 2nd ed), Oxford University Press, Auckland, NZ. at p733.

[78] Albrechtsen, J., op. cit., at p732-3.

[79] (1988) 82 ALR 43.

[80] Op. cit., at 50-1. Cf to the much narrower Dixonian view in Broken Hill South Ltd v Commissioner of Taxation (NSW) (1937) 56 CLR 337.

[81] Union Steamship, op. cit. Following the view of Gibbs J in Pearce v Florenca (1976) 135 CLR 507 at 519.

[82] Cf. the specific statement regarding extraterritorial application in other sections of the Corporations Law.

[83] Albrechtsen, J., op. cit., at p736-737.

[84] Albrechtsen, J., op. cit.,at p740.

[85] See "TRANSMISSION JURISDICTION THE ",

http://www.library.law.miami.edu/~cooper/internet.html Though the paper there is concerns about false or deceptive advertising.

[86] Ross, N. "Securities Dealing on the Internet- Another Test for the Regulators", http://www.budfin.co.nz/nrtax3.htm In this article the author is discussing the offer of securities in the New Zealand context.

[87] Albrechtsen, J., op. cit., at p751.

[88] McDonald, I. "Digital Publishing and Copying: Issues for Authors and Publishers" (1996) August, 9 IPLB 85 at p87. Even though this comment is made in the context of a copyright article, the point is more than applicable to the context of this paper.

[89] French , R. "A Lawyer's guide to Misleading or Deceptive Conduct" (1989) 63 ALJ 250 at p252.

[90] French , R., op. cit., at p252.

[91] Section 51(v) of the Constitution.

[92] Legg, M. "Misleading and Deceptive Conduct in Prospectuses" (1996) 14 C & S L J 47 at p49.

[93] Attorney- General, The Hon Michael Lavarch MP, Recent Initiates in Corporate law Reform, Address to the Australian Corporate Lawyers Association, Brisbane, 15 November 1995.

[94] Larmer v Power Machinery Pty Ltd (1977) 29 FLR 490 at 493. See also French , R., op. cit., at p253.

[95] French , R., op. cit., at p253.

[96] O'Brien v Smolonogov (1983) 53 ALR 107. Cf. under the Corporations Law, `carrying on business' is fairly broadly defined. See text supra at p19- 21.

[97] Likewise private individuals have brought successful actions for breach of copyright, defamation, and trade mark infringement.

[98] This can be seen from the ASC cracking down on licencing; see footnote at p

[99] Chance, C. "Internet Regulation: Can Content be Regulated?" (1996),

http://www.cliffordchance.com/irc_05.htm

[100] Sullivan, C., op. cit. at p35.

[101] "Abstract -- Internet Policy Issues in New Zealand",

http://info.isoc.org/HMP/PAPER/078/abst.html

[102] See Armson, E. "Market Stabilisation in Australia" (1995) 13 C & S L J 81.

[103] Eg. Alta Vista used such a program to attempt to catalogue the internet.

[104] It involves the creation of a simple text files listing all the files that robots are not permit to access.

[105] Ross, N. "Securities Dealing on the Internet- Another Test for the Regulators",

http://www.budfin.co.nz/nrtax3.htm

[106] See Fischel, D. and Ross, D. "Should the Law Prohibit "Manipulation" in Financial Markets?" (1991) 105 Harv L R 503.

[107] To some extend the risks of fraud in this regard can be minimised by the use of page certification by the ASC via the issue of encrypted ASC seals of authenticity. McGregor-Lowndes, M. 'Corporate Disclosure, the Internet and the Australian Securities Commission' (1996) 14 C & S L J 219 at p227.

[108] Sharpe, W. Investments (1981, 2nd ed), Prentice-Hall, Englewood Cliffs, p2- 15.

[109] Sadly it is beyond the scope of these paper to examine these very interesting questions in depth.

[110] Latimer, P. "Securities Regulation Laws- What are they trying to achieve?" in Walker, G. and Fisse, B. (ed), Securities Regulation in Australian & New Zealand (1994, 2nd ed), Oxford University Press, Auckland, NZ. at p165.

[111] Latimer, P., op. cit., at p165.

[112] In Australia, it is the function of the ASC to seek an appropriate balance. Section 1(2) of the ASC Act 1989 (Cth).

[113] See text supra at p6- 8.

[114] Latimer, P., op. cit., at p167.

[115] See Malitz, T. "US Act sets off a "Tidal Wave" of Net Censorship" (1996) 118 Com Update 27.

[116] See text supra at p4.

[117] "Alternatives to Traditional Regulation", http://www.oecd.org/puma/regref/altern.htm

[118] Sullivan, L. "Technology, White Collar Crime ",

http://www.whatsup.com/icc/Papers/White_Collar.html; Chance, C. "Internet Regulation: Can Content be Regulated?" (1996), http://www.cliffordchance.com/irc_05.html. See text supra at p23- 24, 34.

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Copyright © 1996 Raymond Yu.