Entire Section

  • Part 8: Part 8: Prevention of Market Misconduct

    • Chapter 1 — Chapter 1 — Market Misconduct

      • 36. Fraud and market manipulation

        A person shall not, in the DIFC or elsewhere, directly or indirectly, engage or participate in any act, practice or course of conduct relating to Investments that the person knows or reasonably ought to know:

        (a) results in or contributes to, or may result in or contribute to, a misleading appearance of trading activity in, or an artificial price for, Investments; or
        (b) perpetrates a fraud on any person.

      • 37. Misleading or untrue statements

        A person shall not, in the DIFC or elsewhere, make a statement that the person knows or reasonably ought to know, at the time and in light of the circumstances under which it is made:

        (a) is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading; and
        (b) significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of Investments.

      • 38. Misleading or deceptive conduct

        A person shall not, in the DIFC or elsewhere, engage in conduct in relation to Investments that is misleading or deceptive or is likely to mislead or deceive.

      • 39. Misleading or deceptive statements

        (1) A person shall not make an offer of Securities under a Prospectus or Supplementary Prospectus if there is:
        (a) a misleading or deceptive statement in:
        (i) the Prospectus or Supplementary Prospectus;
        (ii) any application form that accompanies the Prospectus or Supplementary Prospectus; or
        (iii) any other document that relates to the offer, or the application form;
        (b) an omission from the Prospectus, Supplementary Prospectus, application form or any other document as required by this Law or the Offered Securities Rules; or
        (c) a new circumstance that under the Law or the Offered Securities Rules requires a Supplementary Prospectus to be filed.
        (2) A person shall not in or from the DIFC make a misleading or deceptive statement in any document issued by him or on his behalf in connection with an Exempt Offer, whether in the DIFC or elsewhere.

      • 40. Statements about future matters

        (1) A person is taken to make a misleading statement about a future matter, whether by himself or his agent, if at the time of making the statement he did not have reasonable grounds for making the statement or causing it to be made.
        (2) The onus for proving that reasonable grounds existed for the purposes of Article 40(1) is on the person who made the statement.

      • 41. Inducing persons to deal

        (1) 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.

      • 42. Insider dealing

        (1) A person who is an insider shall not, in the DIFC or elsewhere, directly or indirectly, deal, or attempt to deal, in an Investment of a Reporting Entity, or in a related investment, on the basis of inside information.
        (2) In this Article "Investment" does not include commodity derivatives

      • 43. Providing inside information

        (1) An insider shall not, other than in the necessary course of business, disclose inside information to another person.
        (2) An insider shall not procure another person to deal in the Investments or related investments in which the insider has inside information.
        (3) In this Article:

        "procure" includes:

        where a person induces or encourages another person by direct or indirect means.

      • 44. Application of provisions

        Articles 36 to 43 of this Part do not apply to conduct which occurs outside the jurisdiction unless the conduct affects the DIFC markets or users of the DIFC markets.

      • 45. Definitions for this Part

        (1) In this Part, in relation to Investments, or related investments, "inside information" means:
        (a) information of a precise nature which:
        (i) is not generally available;
        (ii) relates, directly or indirectly, to one or more Reporting Entities of the Investments concerned or to one or more of the Investments; and
        (iii) would, if generally available, be likely to have a significant effect on the price of the Investments or on the price of related investments.
        (2) In (1)(a) information is precise if it:
        (a) indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur; and
        (b) is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price of Investments or related investments.
        (3) In (1)(a)(iii) information would be likely to have a significant effect on price if and only if it is information of the kind which a reasonable investor would be likely to use as part of the basis of his investment decisions.
        (4) In (1)(a) information about a person's pending orders in relation to an Investment or related investment is also inside information.
        (5) In (1)(a)(i) information which can be obtained by research or analysis conducted by, or on behalf of, users of a market is to be regarded, for the purposes of this Part, as being generally available to them.
        (6) In this Part "insider" means a person who has inside information:
        (a) as a result of his membership of the administrative, management or supervisory bodies of a relevant Reporting Entity;
        (b) as a result of his holding in the capital of the relevant Reporting Entity;
        (c) as a result of having access to the information through the exercise of his employment, profession or duties;
        (d) as a result of his criminal activities; or
        (e) which he has obtained by other means and which he knows, or could reasonably be expected to know, is inside information.
        (7) In this Part, in relation to an Investment (the "First Investment"), a "related investment" means another Investment whose price or value depends, in whole or in part, on the price or value of the First Investment.

    • Chapter 2 — Chapter 2 — Defences

      • 46. Reasonable inquiries and reasonable belief

        A person does not commit a contravention of Articles 38 or 39, if that person proves that he:

        (a) made all inquiries that were reasonable in the circumstances; and
        (b) after doing so, believed on reasonable grounds that the statement or omission was not misleading or deceptive.

      • 47. Reasonable reliance on information given by another person

        (1) A person does not commit a contravention of Articles 38 or 39, if the person proves that he placed reasonable reliance on information given to him by:
        (a) if the person is not a natural person, someone other than a member of the governing body, employee or agent of the person; or
        (b) if the person is a natural person, someone other than an employee or agent of the individual.
        (2) For the purposes of this Part, a person is not the agent of a person or a natural person because he performs a particular professional or advisory function for the person or natural person.

      • 48. Defences for market manipulation, insider dealing and providing inside information

        (1) A person shall not be found to have contravened Article 36 if the person establishes that the conduct or practice the person engaged in was in the performance of, and in accordance with, the price stabilisation requirements as prescribed in the Rules.
        (2) A person shall not be found to have contravened Article 42 if:
        (a) the person establishes that he reasonably believed that the inside information had been disclosed to the market in accordance with this Law or the Rules;
        (b) the dealing occurred in the legitimate performance of an underwriting agreement for the Investments or related investments in question;
        (c) the dealing occurred in the legitimate performance of its functions as a liquidator or receiver;
        (d) the dealing is undertaken solely in the course of the legitimate performance of his functions as a market maker;
        (e) the person executes an unsolicited client order in Investments or related investments while in possession of inside information without contravening Article 43 or otherwise advising or encouraging the client in relation to the transaction;
        (f) the dealing is undertaken legitimately and solely in the context of that person's public takeover bid for the purpose of gaining control of that Reporting Entity or proposing a merger with that Reporting Entity; or
        (g) the sole purpose of the Reporting Entity acquiring its own shares was to satisfy a legitimate reduction of share capital or to redeem securities in accordance with the Rules.
        (3) A person shall not be found to have contravened Article 43 if:
        (a) the person establishes that the information was disclosed by him in accordance with any requirement of the law or a court order; or
        (b) the person establishes that he reasonably believed that the inside information had been disclosed to the market in accordance with this Law or the Rules.

      • 49. Chinese wall arrangements

        A person does not contravene Article 42 by dealing in Investments or related investments if:

        (a) it had in operation at that time an effective information barrier which could reasonably be expected to ensure that the inside information was not communicated to the person or persons who made the decision to deal and that no advice with respect to the transaction or agreement was given to that person or any of those persons by an insider; and
        (b) the information was not communicated and no such advice was given.

      • 50. [Deleted]

         

    • Chapter 3 — Chapter 3 — Civil Compensation

      • 51. Compensation

        (1) Any person prescribed in Rules made by the DFSA as being responsible for a Prospectus is liable to pay compensation to another person who has acquired Securities to which the Prospectus relates and who has suffered loss or damage arising from any untrue or misleading statement in the Prospectus or the omission from it of any material matter required to have been included in the Prospectus under the Law or Rules.
        (2) The DFSA may make Rules prescribing circumstances in which a person who would otherwise be liable under Article 51(1) will not be so liable.
        (3) Nothing in this Article affects the powers, rights or liabilities that any person may have apart from this Article including the power to institute proceedings under Article 94 of the Regulatory Law 2004.