Financial Services
(Amendment No. 3) (Jersey) Law 2008
A LAW to amend further the Financial
Services (Jersey) Law 1998.
Adopted by the
States 26th September 2007
Sanctioned by
Order of Her Majesty in Council 12th February 2008
Registered by the
Royal Court 22nd
February 2008
THE STATES, subject to the sanction of Her Most Excellent Majesty in Council, have
adopted the following Law –
1 Interpretation
In this Law, “principal Law” means the Financial Services
(Jersey) Law 1998[1].
2 Long
title substituted
For the long title to the principal Law there shall be substituted
the following long title –
“A Law to make
provision for the supervision of certain types of financial service business,
generally to provide for purposes connected with, and incidental to, the
supervision of certain types of financial service business, and to create
certain offences, including offences relating to insider dealing, market
manipulation, and providing misleading information, in respect of financial
matters.”.
3 Article
1 amended
In Article 1(1) of the
principal Law, in the definition “company”, before the words
“paragraph (1)” there shall be inserted the words
“Part 3A or”.
4 Cross
heading amended
After Article 18 of the principal Law, for the heading
“POWERS, CONTROLS, MISLEADING STATEMENTS, ETC.” there shall be
substituted the heading “POWERS, CONTROLS, FALSE INFORMATION,
ETC.”.
5 Article 23
amended
In Article 23(1)(b) of the principal Law –
(a) in
clause (i) before the words “may transact” there shall be
inserted the words “has transacted or”;
(b) in
clause (ii) before the words “may enter” and “may
receive” there shall be inserted the words “have entered or”
and “have received or”, respectively.
6 Article 24
amended
In Article 24(1)(c) of the principal Law, for the words
“Article 28, 30 or 31” there shall be substituted the words
“Article 28, 31, 39G or 39L”.
7 Article 26
amended
In Article 26(2) of the principal Law, for the words
“Article 30” there shall be substituted the words
“Article 39G or 39L”.
8 Article 30
repealed
Article 30 of the principal Law shall be repealed.
9 Article 32
amended
In Article 32(2) of the principal Law, for the words “for
suspecting that a person is guilty of contravening Article 7(1) or
30” there shall be substituted the words “to suspect that a person
may have contravened Article 7(1), 39G or 39L”.
10 Article 33
amended
In Article 33 of the principal Law –
(a) in
paragraph (1)(i) for the words “financial services business”
there shall be substituted the words “financial service business”;
(b) in
paragraph (4) for the words “the provisions of Article 7(1) or
30” there shall be substituted the words “Article 7(1), 39G or
39L”.
11 Article 36
amended
In Article 36 of the principal Law –
(a) for
paragraph (6)(a) there shall be substituted the following
sub-paragraph –
(i) in
Article 32(2) or 33(4) to a contravention of Article 7(1), 39G or
39L, or
(ii) in
Article 34(1) to a contravention of a type referred to in Article 32(2),
shall include a reference to
a contravention (committed at any time, including a time before the enactment
of a provision of this Law) of a provision of a law of a country or
territory outside Jersey, which provision the Commission reasonably considers
to be similar to Article 7(1), 39G or 39L;
and”;
(b) in
paragraph (7) for the words “Article 7 or 30 (or in any provision
necessary for the interpretation of that Article)” there shall be
substituted the words “Article 7, 39G or 39L (or in any provision
necessary for the interpretation of any of those Articles)”.
12 Article 38
amended
In Article 38 of the principal Law, in paragraph (1)(k),
the words “under Article 15 of the Company Securities (Insider
Dealing) (Jersey) Law 1988,” shall be deleted.
13 New
Part 3A inserted
After Part 3 of the principal Law there shall be inserted the
following Part –
“Part 3A
MARKET MANIPULATION,
misLEADING information AND INSIDER DEALING
(1) In this Part and in Schedule 6 –
‘company’ means
any body (whether or not incorporated and wherever incorporated or constituted)
which is not a public sector body;
‘issuer’, in
relation to any securities, means any company, public sector body or person by
which or by whom the securities have been or are to be issued;
‘market
maker’ means a person who –
(a) holds
himself or herself out at all normal times in compliance with the rules of a
securities market as willing to acquire or dispose of securities; and
(b) is recognized as doing
so under those rules;
‘public sector
body’ means –
(a) the States or the government of any country
or territory outside Jersey;
(b) a parish in Jersey or the local government
of any country or territory outside Jersey;
(c) any international organization the members
of which include Jersey or a member state of the European Economic Community;
and
(d) the central bank of any sovereign State, the
European System of Central Banks or any other system of central banks;
‘relevant
market rules’, in relation to a securities market, means the rules,
regulating the activities of the securities market in relation to the use and
dissemination of information, that are –
(a) specified in a
legislative instrument of the country or territory, or the part of a country or
territory, that hosts the securities market; or
(b) made by the securities
market, if the securities market is
authorized to make such rules by a legislative instrument of the country or
territory, or the part of a country or territory, that hosts the securities
market;
‘securities’ has
the meaning set out in Schedule 6;
‘securities
market’ means any securities market that is established by or under, or
is regulated by or under, a legislative instrument made by the country or
territory, or the part of a country or territory, that hosts the securities
market.
(2) The States may by Regulations amend the
meaning of “securities” set out in Schedule 6.
39B ‘Dealing’
in securities
(1) For the purposes of this Part, a person
deals in securities if –
(a) he or she acquires or disposes of the
securities (whether as principal or agent); or
(b) he or she procures, directly or indirectly,
an acquisition or disposal of the securities by any other person.
(2) For the purposes of this Part and Schedule
6, ‘acquire’, in relation to a security, includes –
(a) agreeing to acquire the security; and
(b) entering into a contract which creates the
security.
(3) For the purposes of this Part and
Schedule 6, ‘dispose’, in relation to a security,
includes –
(a) agreeing to dispose of the security; and
(b) bringing to an end a contract which created
the security.
(4) For the purposes of paragraph (1), a
person procures an acquisition or disposal of a security if the security is
acquired or disposed of by a person who is –
(a) his or her agent;
(b) his or her nominee; or
(c) a person who is acting at his or her
direction, in relation to the acquisition or disposal.
(5) Paragraph (4) is not exhaustive as to
the circumstances in which one person may be regarded as procuring an acquisition
or disposal of securities by another.
39C Meaning
of ‘inside information’, etc.
(1) For the purposes of this Part, ‘inside
information’ means information which –
(a) relates to particular securities or to a
particular issuer of securities or to particular issuers of securities and not
to securities generally or to issuers of securities generally;
(b) is specific or precise;
(c) has not been made public; and
(d) if it were made public would be likely to
have a significant effect on the price of any securities.
(2) For the purposes of this Part, securities
are ‘price-affected securities’ in relation to inside information,
and inside information is ‘price-sensitive information’ in relation
to securities, if and only if the information would, if made public, be likely
to have a significant effect on the price of the securities.
(3) For the purposes of this Part, information
shall be treated as relating to an issuer of securities which is a company not
only where it is about the company but also where it may affect the company's
business prospects.
(4) For the purposes of this Article
‘price’ includes value.
39D Meaning
of ‘having information as an insider’
(1) For the purposes of this Part, a person has
information as an insider if and only if –
(a) it is, and he or she knows that it is,
inside information; and
(b) he or she has it, and knows that he or she
has it, from an inside source.
(2) For the purposes of paragraph (1), a
person has information from an inside source if and only if –
(a) he or she has it through –
(i) being
a director, employee or shareholder of an issuer of securities, or
(ii) having
access to the information by virtue of his or her employment, office or
profession; or
(b) the direct or indirect source of his or her
information is a person within sub-paragraph (a).
39E Meaning
of ‘made public’
(1) For the purposes of this Part, ‘made
public’, in relation to information, shall be construed in accordance
with this Article but the provisions of this Article are not exhaustive as to
the meaning of that expression.
(2) Information is made public if –
(a) it is published in accordance with the rules
of a securities market for the purpose of
informing investors and their professional advisers;
(b) it is contained in records which by virtue
of any legislation of the country or territory, or a part of a country or
territory, that hosts the securities market are open to inspection by the
public;
(c) it can be readily acquired by those likely
to deal in any securities –
(i) to
which the information relates, or
(ii) of
an issuer to which the information relates; or
(d) it is derived from information which has
been made public.
(3) Information may be treated as made public
even though –
(a) it can be acquired only by persons
exercising diligence or expertise;
(b) it is communicated to a section of the
public and not to the public at large;
(c) it can be acquired only by observation;
(d) it is communicated only on payment of a fee;
or
(e) it is published only outside the country or
territory, or the part of the country or territory, in which is situated the
securities market to which the information relates.
39F Meaning
of ‘professional intermediary’
(1) For the purposes of this Part, a
‘professional intermediary’ is a person –
(a) who carries on a business consisting of an
activity mentioned in paragraph (2) and who holds himself or herself out
to the public or any section of the public (including a section of the public
constituted by persons such as himself or herself) as willing to engage in any
such business; or
(b) who is employed, by a person falling within
sub-paragraph (a), to carry out any such activity.
(2) The activities referred to in
paragraph (1) are –
(a) acquiring or disposing of securities
(whether as principal or agent); or
(b) acting as an intermediary between persons
taking part in any dealing in securities.
(3) A person is not to be treated as carrying on
a business consisting of an activity mentioned in
paragraph (2) –
(a) if the activity in question is merely
incidental to some other activity not falling within paragraph (2); or
(b) merely because he or she occasionally
conducts one of those activities.
(4) For the purposes of this Part, a person
dealing in securities relies on a professional intermediary if and only if a
person who is acting as a professional intermediary carries on an activity
mentioned in paragraph (2) in relation to that dealing.
(1) A person who has information as an insider
is guilty of an offence if, in the circumstances mentioned in
paragraph (3), he or she deals in securities that are price-affected
securities in relation to the information.
(2) A person who has information as an insider
is guilty of an offence if –
(a) he or she encourages another person to deal
in securities that are (whether or not that other person knows it)
price-affected securities in relation to the information, knowing or having
reasonable cause to believe that the dealing would take place in the
circumstances mentioned in paragraph (3); or
(b) he or she discloses the information,
otherwise than in the proper performance of the functions of his or her
employment, office or profession, to another person.
(3) The circumstances referred to in
paragraph (1) and (2) are that –
(a) the acquisition or disposal in question
occurs on a securities market; or
(b) the person dealing relies on a professional
intermediary or is himself or herself acting as a professional intermediary.
(4) A person guilty of an offence under this
Article shall be liable to imprisonment for a term not exceeding 10 years or a
fine.
39H Monetary
policy activity, validity of contracts not affected
(1) Article 39G does not apply to anything
done by a person acting on behalf of a public sector body in pursuit of
monetary policies or policies with respect to exchange rates or the management
of public debt or foreign exchange reserves.
(2) No contract shall be void or unenforceable
by reason only of Article 39G.
39I Territorial
scope of offence of insider dealing
(1) A person is only guilty of an offence under
Article 39G(1) if –
(a) he or she was within Jersey at the time when
he or she is alleged to have done any act constituting or forming part of the
alleged dealing; or
(b) the professional intermediary referred to in
Article 39G was within Jersey at the time when he or she is alleged to
have done anything by means of which the offence is alleged to have been
committed.
(2) A person is only guilty of an offence under
Article 39G(2) if –
(a) he or she was within Jersey at the time when
he or she is alleged to have encouraged the dealing or disclosed the
information; or
(b) the alleged recipient of the encouragement
or information was within Jersey at the time when he or she is alleged to have
received the encouragement or information.
(1) A person is not guilty of an offence under
Article 39G(1) by virtue of dealing in securities if he or she
proves –
(a) that at the time he or she did not expect
the dealing to result in a profit attributable to the fact that the information
in question was price-sensitive information in relation to the securities;
(b) that at the time he or she believed on
reasonable grounds that the information had been disclosed widely enough to
ensure that none of those taking part in the dealing would be prejudiced by not
having the information; or
(c) that he or she would have done what he or
she did even if he or she had not had the information.
(2) A person is not guilty of an offence under
Article 39G(2) by virtue of encouraging another person to deal in securities
if he or she proves –
(a) that at the time he or she did not expect
the dealing to result in a profit attributable to the fact that the information
in question was price-sensitive information in relation to the securities;
(b) that at the time he or she believed on
reasonable grounds that the information had been or would be disclosed widely
enough to ensure that none of those taking part in the dealing would be
prejudiced by not having the information; or
(c) that he or she would have done what he or
she did even if he or she had not had the information.
(3) A person is not guilty of an offence under
Article 39G(2) by virtue of a disclosure of information if he or she
proves –
(a) that he or she did not at the time expect
any person, because of the disclosure, to deal in securities in the
circumstances mentioned in Article 39G(3); or
(b) that, although he or she had such an
expectation at the time, he or she did not expect the dealing to result in a
profit attributable to the fact that the information was price-sensitive
information in relation to the securities.
(4) A person is not guilty of an offence under Article 39G(1) or (2) by
virtue of dealing in securities or encouraging another person to deal if he or
she proves that he or she acted in good faith in the course of –
(a) his
or her business as
a market maker; or
(b) his
or her employment
in the business of a market maker.
(5) A person is not guilty of an offence under Article 39G(1) or (2) by
virtue of dealing in securities in a securities market or encouraging another
person to deal in a securities market if he or she proves that he or she acted
in conformity with the relevant market rules.
(6) In this Article references to a profit
include references to the avoidance of a loss.
39K Defence
if information was market information
(1) A person is not guilty of an offence under
Article 39G(1) or (2) by virtue of dealing in securities or encouraging
another person to deal if he or she proves that –
(a) the
information which he or she had as an insider was market information; and
(b) it
was reasonable for a person in his or her position to have acted as he or she did despite having that information as an insider at the time.
(2) In determining for the purposes of
paragraph (1) whether it is reasonable for a person to do any act despite
having market information at the time, there shall, in particular, be taken
into account –
(a) the
content of the information;
(b) the
circumstances in which he or she first had the information and in what capacity; and
(c) the
capacity in which he or she acts at the time the determination is made.
(3) A person is not guilty of an offence under
Article 39G(1) or (2) by virtue of dealing in securities or encouraging another
person to deal if he or she proves –
(a) that
he or she acted –
(i) in
connection with an acquisition or disposal which was under consideration or the
subject of negotiation, or in the course of a series of such acquisitions or
disposals, and
(ii) with
a view to facilitating the accomplishment of the acquisition or disposal or the
series of acquisitions or disposals; and
(b) that
the information which he or she had as an insider was market information arising directly out of
his or her involvement in the
acquisition or disposal or series of acquisitions or disposals.
(4) For the purposes of this Article, market
information is information consisting of one or more of the following
facts –
(a) that securities of a particular kind have been or are to be acquired
or disposed of, or that their acquisition or disposal is under consideration or
the subject of negotiation;
(b) that
securities of a particular kind have not been or are not to be acquired or
disposed of;
(c) the
number of securities acquired or disposed of or to be acquired or disposed of
or whose acquisition or disposal is under consideration or the subject of
negotiation;
(d) the
price (or range of prices) at which securities have been or are to be acquired
or disposed of or the price (or range of prices) at which securities whose
acquisition or disposal is under consideration or the subject of negotiation
may be acquired or disposed of;
(e) the identity of the persons involved or
likely to be involved in any capacity in an acquisition or disposal.
Market
manipulation and misleading information
(a) makes
a statement, promise or forecast which the person knows to be misleading, false or deceptive;
(b) dishonestly
conceals any material facts; or
(c) recklessly
makes (dishonestly or otherwise) a statement, promise or forecast which is
misleading, false or deceptive,
is guilty of an offence if he
or she makes the statement, promise or forecast or conceals the facts for the
purpose of inducing, or is reckless as to whether it may induce, another person
(whether or not the other person is the person to whom the statement, promise
or forecast is made or from whom the facts are concealed) –
(i) to enter or offer to enter into, or
refrain from entering or offering to enter into, an agreement or arrangement
the making of which or performing of which constitutes financial service
business or would do so but for Schedule 2; or
(ii) to exercise, or refrain from
exercising, any rights conferred by an investment or contract of general
insurance.
(2) Any person who does any act or engages in
any course of conduct which creates a false or misleading impression as to the
market in or the price or value of any investment or a contract of general insurance
is guilty of an offence if the person does so for the purpose of creating that
impression and of thereby inducing another person –
(a) to acquire, dispose of, subscribe for or
underwrite that investment or contract of general insurance; or
(b) to refrain from doing so or to exercise, or
refrain from exercising, any rights conferred by that investment or contract of
general insurance.
(3) A person does not
commit an offence under this Article unless –
(a) the statement, promise
or forecast is made in or from, or the facts are concealed in or from, Jersey,
or arrangements are made in or from the Jersey for the statement, promise or
forecast to be made or the facts to be concealed;
(b) the person on whom the inducement is
intended to or may have effect is in Jersey; or
(c) the agreement or arrangement is or would be
entered into or the rights are or would be exercised in Jersey.
(4) A person guilty of an offence under this
Article shall be liable to imprisonment for a term not exceeding 10 years
or a fine.
(5) In paragraphs (1) and (2),
‘contract of general insurance’ means a contract of general
insurance, general insurance product or general insurance service.
Article 39L does not
apply to anything done by a person acting on behalf of a public sector body in
pursuit of monetary policies or policies with respect to exchange rates or the
management of public debt or foreign exchange reserves.
(1) A person is not guilty of an offence under
Article 39L(1) in relation to a statement, promise or forecast if the
statement, promise or forecast was made in respect of a securities market and he
or she proves that he or she acted in conformity with the relevant market rules.
(2) A person is not guilty of an offence under
Article 39L(2) in relation to an act or a course of conduct if he or she
engaged in the act or course of conduct in respect of a securities
market and he or she proves that –
(a) he or she reasonably
believed that the act or conduct would not create an impression that was false
or misleading as to the matters contained in Article 39L(2); or
(b) he or she acted in
conformity with the relevant market rules.”.
14 Schedule 6
added
In the principal Law, after Schedule 5, there shall be added
the Schedule set out in Schedule 1.
15 Amendment
and repeal of enactments
The enactments set out in Schedule 2 shall be amended or
repealed as set out in that Schedule.
16 Citation
and commencement
(1) This
Law may be cited as the Financial Services (Amendment No. 3) (Jersey)
Law 2008.
(2) This
Law shall come into force on such day or days as the States may by Act appoint,
and different days may be appointed for different provisions.
l.-m. hart
Assistant Greffier of the States