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Jan 1 2015 onwards

CMC 8 Inducing Another Person to Deal



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The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

Article 60 of the Markets Law

1. Article 60 of the Law provides that:

A person shall not, in the DIFC or elsewhere, induce another person to deal in Investments:
(a) by making or publishing a statement, promise or forecast if the person knows, or is reckless as to whether, the statement is misleading, false or deceptive;
(b) by a concealment of material facts; or
(c) by recording or storing information that the person knows to be false or misleading in a material respect or may be materially misleading.
2. Article 60 sets out a number of tests relating to knowledge of the person concerned. It requires that the person making or publishing a statement, promise or forecast referred to in Article 60(a), knows, or is reckless as to whether, the statement is misleading, false or deceptive. It also requires that the person recording or storing information referred to in Article 60(c) knows the information is false or misleading in a material respect or that it may be materially misleading.

Examples of inducing another person to deal

3. The following are specific examples of conduct that, in the DFSA's view, may contravene Article 60:
(a) a person involved in a boiler room operation cold calls investors and as part of his high pressure sales techniques makes exaggerated claims about the prospects of shares in a company. The shares are in fact of little value, are relatively illiquid and are being sold at an inflated price;
(b) a person, A, circulates marketing information about an InvestmentG to a small group of potential investors; the marketing information includes exaggerated claims about the potential future performance of the investment when A knows or ought to know that there is no reasonable basis for making the claims;
(c) a person, B, offers to sell shares he owns in a Company to a number of other private investors. B discloses a range of positive information about the Company's prospects but fails to disclose other information about financial difficulties the company has recently experienced;
(d) C, a financial adviser who is managing InvestmentsG for a client, records false or misleading information about the value of investments in the client's portfolio. His purpose is to ensure that portfolio account statements sent to the client show the value of the portfolio to be higher than its actual value, in order to induce the client to provide funds to purchase further InvestmentsG .
The DFSAG notes that some of the above examples may also contravene other Articles such as Article 55(false or misleading statements).
Derived from GM9/2014 (Made 1st January 2015). [VER1/01-15]