Financial Services and Markets Bill - continued        House of Lords

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  PART XXVII
  OFFENCES
 
Miscellaneous offences
Misleading statements and practices.     392. - (1) This subsection applies to a person who-
 
 
    (a) makes a statement, promise or forecast which he knows to be misleading, false or deceptive in a material particular;
 
    (b) dishonestly conceals any material facts whether in connection with a statement, promise or forecast made by him or otherwise; or
 
    (c) recklessly makes (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or deceptive in a material particular.
      (2) A person to whom subsection (1) applies is guilty of an offence if he 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 person to whom the statement, promise or forecast is made)-
 
 
    (a) to enter or offer to enter into, or to refrain from entering or offering to enter into, a relevant agreement; or
 
    (b) to exercise, or refrain from exercising, any rights conferred by a relevant investment.
      (3) 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 relevant investments is guilty of an offence if he does so for the purpose of creating that impression and of thereby inducing another person to acquire, dispose of, subscribe for or underwrite those investments or to refrain from doing so or to exercise, or refrain from exercising, any rights conferred by those investments.
 
      (4) In proceedings brought against any person for an offence under subsection (3) it is a defence for him to show-
 
 
    (a) that he reasonably believed that his act or conduct would not create an impression that was false or misleading as to the matters mentioned in that subsection; or
 
    (b) that he acted or engaged in the conduct-
 
      (i) for the purpose of stabilising the price of investments; and
 
      (ii) in conformity with price stabilising rules.
      (5) Subsections (1) and (2) do not apply unless-
 
 
    (a) the statement, promise or forecast is made in or from, or the facts are concealed in or from, the United Kingdom or arrangements are made in or from the United Kingdom 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 the United Kingdom; or
 
    (c) the agreement is or would be entered into or the rights are or would be exercised in the United Kingdom.
      (6) Subsection (3) does not apply unless-
 
 
    (a) the act is done, or the course of conduct is engaged in, in the United Kingdom; or
 
    (b) the false or misleading impression is created there.
      (7) A person guilty of an offence under this section is liable-
 
 
    (a) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both;
 
    (b) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine, or both.
      (8) "Relevant agreement" means an agreement-
 
 
    (a) the entering into or performance of which by either party constitutes an activity of a specified kind or one which falls within a specified class of activity; and
 
    (b) which relates to a relevant investment.
      (9) "Relevant investment" means an investment of a specified kind or one which falls within a prescribed class of investment.
 
      (10) Schedule 2 applies for the purposes of subsection (9), with references to section 20 being read as references to that subsection.
 
      (11) Nothing in Schedule 2, as applied by subsection (10), limits the power conferred by subsection (9).
 
      (12) "Investment" includes any asset, right or interest.
 
      (13) "Specified" means specified in an order made by the Treasury.
 
Misleading the Authority: residual cases.     393. - (1) A person who, in purported compliance with any requirement imposed by or under this Act, knowingly or recklessly gives the Authority information which is false or misleading in a material particular is guilty of an offence.
 
      (2) Subsection (1) applies only to a requirement in relation to which no other provision of this Act creates an offence in connection with the giving of information.
 
      (3) A person guilty of an offence under this section is liable-
 
 
    (a) on summary conviction, to a fine not exceeding the statutory maximum;
 
    (b) on conviction on indictment, to a fine.
Misleading the Director General of Fair Trading.     394. Section 44 of the Competition Act 1998 (offences connected with the provision of false or misleading information) applies in relation to any function of the Director General of Fair Trading under this Act as if it were a function under Part I of that Act.
 
 
Bodies corporate and partnerships
Offences by bodies corporate etc.     395. - (1) If an offence under this Act committed by a body corporate is shown-
 
 
    (a) to have been committed with the consent or connivance of an officer, or
 
    (b) to be attributable to any neglect on his part,

the officer as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.

      (2) If the affairs of a body corporate are managed by its members, subsection (1) applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body.
 
      (3) If an offence under this Act is committed by a partnership in England and Wales or Northern Ireland, every partner is guilty of the offence unless he shows that-
 
 
    (a) he did not know that the offence was being committed; or
 
    (b) he took reasonable steps to prevent it.
      (4) If an offence under this Act committed by a partnership in Scotland is shown-
 
 
    (a) to have been committed with the consent or connivance of a partner, or
 
    (b) to be attributable to any neglect on his part,

the partner as well as the partnership is guilty of the offence and liable to be proceeded against and punished accordingly.

      (5) In subsection (4) "partner" includes a person purporting to act as a partner.
 
      (6) "Officer", in relation to a body corporate, means-
 
 
    (a) a director, member of the committee of management, chief executive, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity; and
 
    (b) an individual who is a controller of the body.
      (7) Regulations may provide for the application of any provision of this section, with such modifications as the Treasury consider appropriate, to a body corporate or unincorporated formed or recognised under the law of a territory outside the United Kingdom.
 
 
Institution of proceedings
Proceedings for offences.     396. - (1) In this section "offence" means an offence under this Act or subordinate legislation made under this Act.
 
      (2) Proceedings for an offence may be instituted in England and Wales only-
 
 
    (a) by the Authority or the Secretary of State; or
 
    (b) by or with the consent of the Director of Public Prosecutions.
      (3) Proceedings for an offence may be instituted in Northern Ireland only-
 
 
    (a) by the Authority or the Secretary of State; or
 
    (b) by or with the consent of the Director of Public Prosecutions for Northern Ireland.
      (4) Except in Scotland, proceedings for an offence under section 199 may also be instituted by the Director General of Fair Trading.
 
      (5) In exercising its power to institute proceedings for an offence, the Authority must comply with any conditions or restrictions imposed in writing by the Treasury.
 
      (6) Conditions or restrictions may be imposed under subsection (5) in relation to-
 
 
    (a) proceedings generally; or
 
    (b) such proceedings, or categories of proceedings, as the Treasury may direct.
Power of the Authority to institute proceedings for certain other offences.     397. - (1) Except in Scotland, the Authority may institute proceedings for an offence under-
 
 
    (a) Part V of the Criminal Justice Act 1993 (insider dealing); or
 
    (b) prescribed regulations relating to money laundering.
      (2) In exercising its power to institute proceedings for any such offence, the Authority must comply with any conditions or restrictions imposed in writing by the Treasury.
 
      (3) Conditions or restrictions may be imposed under subsection (2) in relation to-
 
 
    (a) proceedings generally; or
 
    (b) such proceedings, or categories of proceedings, as the Treasury may direct.
 
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