In the appeal brought by Daniel Schlaepfer in a matter involving allegations of market manipulation, three Justices of the NSW Court of Appeal Court rejected the expert evidence they described as “indirect and ultimately somewhat speculative evidence” that provided the foundation for the lower courts’ decisions and quashed the previous verdict.
This decision by the Appeals Court reiterates the need for evidence of specific instances of intraday manipulative behaviour (see paragraph 197 of the judgement) to support a charge of market manipulation under 1041A and 1041B. Such is the evidence that we routinely provide in our opinions and which emerges from a peer-reviewed and court-tested methodology.
In the decision, Justice McCallum wrote: ‘ASIC did not even attempt to demonstrate that Select Vantage’s trading patterns actually reflected the whole-day manipulative strategy it maintained Select Vantage traders were pursuing, even though such evidence should have been available. Manipulation in the form alleged has never previously been observed. There are at least some questions about how rewarding such a strategy would be. The level of coordination required would be considerable, but there was no independent evidence of any such coordination.
In those circumstances, approaching the evidence in the general way in which it was approached by the primary judge and by the parties, the finding that Select Vantage was likely engaged in manipulative trading contrary to ss 1041A and/or 1041B on each of the relevant stock/days cannot stand. Although that finding was not in terms a finding of a contravention of the statutory prohibitions, and no question of civil penalty arose in the proceedings, the allegations are extremely serious. Having regard to their gravity and the indirect and ultimately somewhat speculative evidence offered for them, in my view it is not possible affirmatively to conclude that Select Vantage or Merlito were engaged in market manipulation.’
Read the decision