By Professor Ann O’Connell
In 1814 a uniformed man posing as ‘Colonel du Bourg’ arrived at Dover bearing news that Napoleon had been killed and his armies defeated. The effect on the London Stock Exchange was dramatic — more than £1.1 million of government bonds were sold in one day before it became clear that the news was a hoax. Captain de Berenger, who posed as the Colonel, was charged with having conspired by spreading false rumours to increase the price of the bonds so that he (and others) could profit from the sale (R v de Berenger (1814) 3 M&S 67). More recently, in January of this year an anti-coal activist released a fake press release purporting to be from the lenders to a mining project to be carried out by listed company, Whitehaven Coal Ltd. The press release announced that the lender was withdrawing from the project for ‘ethical reasons’. The effect was to cause panic selling and the price of Whitehaven’s shares fell dramatically before a trading halt was implemented.
In DPP (Cth) v JM  HCA 30, the High Court considered the legality of a less dramatic way of affecting the securities market: strategically buying shares. The Commonwealth Director of Public Prosecutions alleges that JM asked a family member to buy shares in a company for the purpose of lifting its share price sufficiently high to prevent a bank from requiring extra collateral for a loan he took out to buy call options in the same company. JM has been charged with the crime of creating or maintaining an ‘artificial price’ in a financial market. In advance of his trial, the High Court agreed to resolve a dispute about the meaning of ‘artificial price’. Continue reading