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Conviction for manipulating data for company applying to become listed.

BIScom Subsection: 
Author: 
Editorial Staff

Mark Damion Kawecki, of Frankston Victoria, Australia has appeared before the Melbourne Magistrates' Court and pleaded guilty in the first case of its kind in Australia. He fiddled the figures to help a company get on the board.

Under the rules of the Australian Stock Exchange, known as ASX, "a company must meet the ‘minimum spread requirement’ (a minimum number of unrelated shareholders in the company) before its shares can be quoted and traded on the ASX. This serves to ensure some level of liquidity at the time the company is initially listed and to keep poorer quality applicants, that are not able to attract sufficient investor interest, from being admitted to the ASX official list", according to ASIC, the regulator.

That isn't immediately clear as to its meaning even though it's in perfectly good English. To simplify: closely held companies i.e. those with a small number of related shareholders, are not welcome on ASX. ASX requires applicants to have a number of shareholders each of whom has committed to a reasonable level of investment so that new listings don't have all their financial eggs in one basket.

Kawecki has pleaded guilty to two counts of dishonest conduct contrary to s1041G of the Corporations Act 2001, a Commonwealth, i.e. federal statute. ASIC says that attempts to circumvent the spread rules by "artificial means" adversely affects the integrity of the market and is serious market misconduct.

The charges are that Kawecki

1. Engaged in dishonest conduct in relation to the submission of applications for shares containing false information about the applicant’s address to the share registry for three entities seeking admission to the ASX official list between about 19 January 2015 and 23 December 2016; and
2. Engaged in dishonest conduct in relation to the submission of applications for shares and a table of applications for shares containing false or misleading information about the beneficial holder of shares to the share registry for a company seeking admission to the ASX official list and to a stockbroker assisting an entity’s re-admission onto the ASX official list between about 23 January 2015 and 9 July 2015.

ASIC has previously taken regulatory action against Kawecki:

- in June 2018, ASIC banned Mr Kawecki from providing financial services for a period of seven years following an ASIC investigation into the conduct (18-185MR)

- in October 2018, a Sydney authorised representative was prohibited from providing financial services for a period of five years under the terms of a court-enforceable undertaking (18-319MR).

In relation to the criminal charges, ASIC’s investigation into Kawecki’s conduct related to the provision of false or misleading information contained within applications to participate in public offerings by four entities seeking to be admitted (or re-admitted) to the ASX official list.

Each offence carries a maximum penalty of ten years’ imprisonment or a fine of up to 4,500 penalty units or both.

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