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Monday, 18 October 1999
Page: 9842

Senator IAN CAMPBELL (4:38 PM) —There is a whole series of protections in the law to stop people from being able to do that. There are the misleading conduct provisions, for example. The licensed securities dealer, in the first place, has to go through all of the requirements under 708(8)(c), which reads:

. . . the dealer is satisfied on reasonable grounds that the person to whom the offer is made has previous experience in investing in securities that allows them to assess—

And it goes through all of the different requirements. That is what has got to happen in the first place. As far as advertising goes, they are not allowed to do that. That is already against the law. If they make any false and misleading misrepresentations, they are breaching the law. If they do not make proper disclosures to ASIC through their accounts, they breach the law. There are the accounting standards provisions, which we are about to get to, which are a breach of the law.

Virtually every single matter you raised is covered by existing provisions, and sometimes enhanced provisions, of the law. What you are looking at here is a significant improvement on the current provision whereby some people are exempted, because they are sophisticated, from the provisions of prospectuses. Instead of having a blanket exemption for anyone who may possibly have $500,000 to invest, we are saying, `Here is a range of sophisticated tests as to whether or not you can receive offers if you are sophisticated.' These provisions do not apply to the great bulk of Australian investors. The great bulk of Australian investors will have to receive a prospectus.