Law of Investment and Financial Markets Assignment (Bdeft 6th Intake)
Law of Investments & Financial Markets
ASSIGNMENT
23 MARCH 2009
BDEFT 6TH INTAKE
By TEAM K.M.O.Y.
Compiled and Completed by:
KHAIRUNISA BTE SARUAN
MARINA BTE OSMAN
ONG LICHING
YING HSU FANG, EUNICE
Table of Contents
PART A
Ignorant Hairdresser vs. Professional Consultant 4
Know Your Client 5
Appropriate Advice based on Reason 6
Fiduciary Duty and Conflict of Interests 7
Making False Representations as to returns – Misrepresentation 8
Fraudulent Misrepresentation 8
Is Paula able to claim in negligence under tort? 9
Factors determining existence of a special relationship and duty of care: 9
Resulting Remedies? 11
Should Eastpoint be held responsible for the unprofessional conduct of Norm? 12
PART B
Con of the century 14
In Other Words... 17
Violation: Statements of law 18
Relevance between “Con of the Century” and Investment Law 19
Commentary on the “Con of the Century” 21
BIBLIOGRAPHY 23
PART A
Ignorant Hairdresser vs. Professional Consultant
Before we begin, it is understood that Norm is providing financial services in a financial services business: s 761A.
Puala is considered as a consumer of financial services as the financial services are of a kind ordinarily acquired for personal, domestic or household use – ASIC Act, s 12 BC.
Hence she will be able to use the ASIC Act against Eastpoint and Norm.
Assuming that Paula is in the retail category (s 761G (5)) and does not fall into the threshold of wholesale, Norm have more obligations towards Paula.
As a professional financial consultant providing personal advice to a retail client, Norm is bound by Regulatory Guide 175 (RG 175) and he should act in the best interests of his client – Paula – and take a step further in understanding her financial situation and risk tolerance.
For further enforcement, does a contract[1] exist between the two parties?
1. Offer and Acceptance
Paula approached Eastpoint to provide
ASSIGNMENT
23 MARCH 2009
BDEFT 6TH INTAKE
By TEAM K.M.O.Y.
Compiled and Completed by:
KHAIRUNISA BTE SARUAN
MARINA BTE OSMAN
ONG LICHING
YING HSU FANG, EUNICE
Table of Contents
PART A
Ignorant Hairdresser vs. Professional Consultant 4
Know Your Client 5
Appropriate Advice based on Reason 6
Fiduciary Duty and Conflict of Interests 7
Making False Representations as to returns – Misrepresentation 8
Fraudulent Misrepresentation 8
Is Paula able to claim in negligence under tort? 9
Factors determining existence of a special relationship and duty of care: 9
Resulting Remedies? 11
Should Eastpoint be held responsible for the unprofessional conduct of Norm? 12
PART B
Con of the century 14
In Other Words... 17
Violation: Statements of law 18
Relevance between “Con of the Century” and Investment Law 19
Commentary on the “Con of the Century” 21
BIBLIOGRAPHY 23
PART A
Ignorant Hairdresser vs. Professional Consultant
Before we begin, it is understood that Norm is providing financial services in a financial services business: s 761A.
Puala is considered as a consumer of financial services as the financial services are of a kind ordinarily acquired for personal, domestic or household use – ASIC Act, s 12 BC.
Hence she will be able to use the ASIC Act against Eastpoint and Norm.
Assuming that Paula is in the retail category (s 761G (5)) and does not fall into the threshold of wholesale, Norm have more obligations towards Paula.
As a professional financial consultant providing personal advice to a retail client, Norm is bound by Regulatory Guide 175 (RG 175) and he should act in the best interests of his client – Paula – and take a step further in understanding her financial situation and risk tolerance.
For further enforcement, does a contract[1] exist between the two parties?
1. Offer and Acceptance
Paula approached Eastpoint to provide
Bibliography: 1. Aidikoff, Uhl & Bakhtiari. (2008). SEC Statement on Madoff Investigation. Weblog post, 17 December. Viewed January 18, 2009, from http://securitiesarbitration.blogspot.com/2008/12/sec-statement-on-madoff-investigation.html 2 3. Diana B. Henriques & Zachery Kouwe. (2008, December 11). Prominent Trader Accused of Defrauding Clients. The New York Times. Viewed January 17, 2009, from http://www.nytimes.com/2008/12/12/business/12scheme.html?_r=3&ref=business 4 5. Matthew Goldstein. (2008, 18 December). Madoff: What a Week. BusinessWeek. Viewed January 16, 2009, from http://www.businessweek.com/investing/insights/blog/archives/2008/12/madoff_what_a_w.html 6 7. Nelson D. Schwartz & Julia Werdigier. (2009, January 16). Suit Claims Madoff’s Role was Kept from Investors. The New York Times. Viewed January 25, 2009, from http://www.nytimes.com/2009/01/17/business/17medici.html?_r=1 8 9. Robert Chew. (2008, 15 December). How I Got Screwed by Bernie Madoff. Times. Viewed January 15, 2009, from http://www.time.com/time/business/article/0,8599,1866398,00.html 10 11. Stephen Gandel. (2008, 12 December). Wall Street’s Latest Downfall: Madoff Charged with Fraud’. Times. Viewed January 15, 2009,from http://www.time.com/time/business/article/0,8599,1866154,00.html?iid=sphere-inline-bottom 12 13. Voltairenet. (2008). Bernard Madoff: Wall Street Swindler Strikes Powerful Blows for Social Justice. Viewed January 17, 2009, from http://www.voltairenet.org/article158903.html -----------------------