Criminal Code Amendment Act 2004
CRIMINAL CODE AMENDMENT ACT 2004

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BERMUDA
2004 : 24

THE CRIMINAL CODE AMENDMENT ACT 2004

[Date of Assent: 6 August, 2004]

[Operative Date: 1 November, 2004]

WHEREAS it is expedient to make provision for the offences of
misleading statements and practices, market manipulation and insider
dealing; and for connected purposes:

Be it enacted by The Queen's Most Excellent Majesty, by and
with the advice and consent of the Senate and the House of Assembly of
Bermuda, and by the authority of the same, as follows:

Short title, commencement and application
1 (1) This Act may be cited as the Criminal Code Amendment Act
2004 and shall come into operation on 1 November 2004.

(2) This Act shall have effect only in relation to offences
committed after the coming into operation of this Act.

Interpretation
2 In this Act, the "principal Act" means the Criminal Code Act
1907.

Section 405 of principal Act repealed and replaced
3 Section 405 of the principal Act is repealed and replaced by the
following

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"Misleading statements and practices
405 (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 he is
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) 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,
Bermuda or arrangements are made in or from
Bermuda 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 Bermuda; or

(c) the agreement is or would be entered into or the
rights are or would be exercised in Bermuda.

(4) A person guilty of an offence under this section is
liable

(a) on summary conviction, to a fine of $10,000 or to
imprisonment for six months or both;

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(b) on conviction on indictment, to a fine of
$100,000, or to imprisonment for five years or
both.

(9)"Relevant agreement" means an agreement 

(a) the entering into or performance of which by
either party constitutes an investment activity
within the meaning of section 3(2) of the
Investment Business Act 2003; and

(b) which relates to a relevant investment.

(10) "Relevant investment" means an investment within the
meaning of section 3(1)(a) of the Investment Business Act 2003.".

Sections 405A to N added to principal Act
4 The principal Act is amended by adding the following sections
after section 405

"Market manipulation
405A (1) 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.

(2) In proceedings brought against any person for an
offence under subsection (1) it is a defence for him to show 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.

(3) Subsection (1) does not apply unless 

(a) the act is done, or the course of conduct is
engaged in, in Bermuda; or

(b) the false or misleading impression is created in
Bermuda.

(4) "Relevant investment" means an investment within the
meaning of section 3(1)(a) of the Investment Business Act 2003
which is listed on the Bermuda Stock Exchange, or any other
exchange in Bermuda in relation to which a recognition order is
in force under the Investment Business Act 2003.

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(5) A person guilty of an offence under this section is
liable

(a) on summary conviction, to a fine of $10,000 or to
imprisonment for six months or both;

(b) on conviction on indictment, a fine of $100,000
or to imprisonment for five years or both.

The offence of insider dealing

The offence
405B (1) An individual who has information as an insider
is guilty of insider dealing if, in the circumstances mentioned in
subsection (3), he deals in investments that are price-affected
investments in relation to the information.

(2) An individual who has information as an insider
is also guilty of insider dealing if —

(a) he encourages another person to deal in
investments that are (whether or not that other
knows it) price-affected investments in relation
to the information, knowing or having
reasonable cause to believe that the dealing
would take place in the circumstances
mentioned in subsection (3); or

(b) he discloses the information, otherwise than in
the proper performance of the functions of his
employment, office or profession, to another
person.

(3) The circumstances referred to in subsections (1) and (2)
are that the acquisition or disposal in question occurs on a
recognised investment exchange.

(4) This section has effect subject to sections 405C and
405D.

Defences
405C (1) An individual is not guilty of insider dealing by
virtue of dealing in investments if he shows —

(a) that he did not at the time expect the dealing to
result in a profit attributable to the fact that the
information in question was price-sensitive
information in relation to the investments;

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(b) that at the time he believed on reasonable
grounds that the information had been disclosed
widely enough to ensure that none of those
taking part in the dealing would be prejudiced
by not having the information; or

(c) that he would have done what he did even if he
had not had the information.

(2) An individual is not guilty of insider dealing by virtue of
encouraging another person to deal in investments if he
shows —

(a) that he did not at the time expect the dealing to
result in a profit attributable to the fact that the
information in question was price-sensitive
information in relation to the investments;

(b) that at the time he believed on reasonable
grounds that the information had been or would
be disclosed widely enough to ensure that none
of those taking part in the dealing would be
prejudiced by not having the information; or

(c) that he would have done what he did even if he
had not had the information.

(3) An individual is not guilty of insider dealing by virtue of
a disclosure of information if he shows —

(a) that he did not at the time expect any person,
because of the disclosure, to deal in investments
in the circumstances mentioned in section
405B; or

(b) that, although he had such an expectation at
the time, he did not expect the dealing to result
in a profit attributable to the fact that the
information was price-sensitive information in
relation to the investments.

(4) In this section references to a profit include references to
the avoidance of a loss.

Special defences
405D Sections 405E and 405F provide special defences to the
offence of insider dealing.

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Market makers
405E (1) An individual is not guilty of insider dealing by
virtue of dealing in investments or encouraging another person
to deal if he shows that he acted in good faith in the course of —

(a) his business as a market maker; or

(b) his employment in the business of a market
maker.

(2) A market maker is a person who

(a) holds himself out at all normal times in
compliance with the rules of a recognised
investment exchange as willing to acquire or
dispose of investments; and

(b) is recognised as doing so under those rules.

Market information
405F (1) An individual is not guilty of insider dealing by
virtue of dealing in investments or encouraging another person
to deal if he shows that —

(a) the information which he had as an insider was
market information; and

(b) it was reasonable for an individual in his
position to have acted as he did despite having
that information as an insider at the time.

(2) In determining whether it is reasonable for an individual
to do any act despite having market information at the time,
there shall, in particular, be taken into account —

(a) the content of the information;

(b) the circumstances in which he first had the
information and in what capacity; and

(c) the capacity in which he now acts.

(3) An individual is not guilty of insider dealing by virtue of
dealing in investments or encouraging another person to deal if
he shows —

(a) that he acted —

(i) in connection with an acquisition or
disposal which was under consideration
or the subject of negotiation, or in the

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course of a series of such acquisitions or
disposals; and

(ii) with a view to facilitating the
accomplishment of the acquisition or
disposal or the series of acquisitions or
disposals; and

(b) that the information which he had as an insider
was market information arising directly out of
his involvement in the acquisition or disposal or
series of acquisitions or disposals.

(4) For the purposes of subsections (2) and (3) market
information is information consisting of one or more of the
following facts —

(a) that investments of a particular kind have been
or are to be acquired or disposed of, or that their
acquisition or disposal is under consideration or
the subject of negotiation;

(b) that investments of a particular kind have not
been or are not to be acquired or disposed of;

(c) the number of investments acquired or disposed
of or to be acquired or disposed of or whose
acquisition or disposal is under consideration or
the subject of negotiation;

(d) the price (or range of prices) at which
investments have been or are to be acquired or
disposed of or the price (or range of prices) at
which investments whose acquisition or disposal
is under consideration or the subject of
negotiation may be acquired or disposed of;

(e) the identity of the persons involved or likely to
be involved in any capacity in an acquisition or
disposal.

Investments to which sections 405B to 405F apply
405G Sections 405B to 405F apply to any investment which —

(a) falls within paragraphs 1 to 9 of Part 1 of the
First Schedule to the Investment Business Act
2003; and

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(b) is listed on the Bermuda Stock Exchange or any
other recognised investment exchange in
Bermuda;

and in the provisions of these sections any reference to an
investment is a reference to an investment to which these
sections apply.

"Dealing in investments"
405H (1) For the purposes of sections 405B to 405F, a
person deals in investments if 

(a) he acquires or disposes of the investments
(whether as principal or agent); or

(b) he procures, directly or indirectly, an acquisition
or disposal of the investments by any other
person.

(2) For the purposes of sections 405B to 405F and this
section, "acquire", in relation to an investment, includes 

(a) agreeing to acquire the investment; and

(b) entering into a contract which creates the
investment.

(3) For the purposes of sections 405B to 405F and this
section, "dispose", in relation to an investment, includes

(a) agreeing to dispose of the investment; and

(b) bringing to an end a contract which created the
investment.

(4) For the purposes of subsection (1), a person procures an
acquisition or disposal of an investment if the investment is
acquired or disposed of by a person who is 

(a) his agent;

(b) his nominee; or

(c) a person who is acting at his direction;

in relation to the acquisition or disposal.

(5) Subsection (4) is not exhaustive as to the circumstances
in which one person may be regarded as procuring an
acquisition or disposal of investments by another.

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"Inside information", etc.
405I (1) For the purposes of this section and section 405J,
"inside information" means information which —

(a) relates to particular investments or to a
particular issuer of investments or to particular
issuers of investments and not to investments
generally or to issuers of investments generally;

(b) is specific or precise;

(c) has not been made public; and

(d) if it were made public would be likely to have a
significant effect on the price of any such
investments.

(2) For the purposes of sections 405B to 405F, investments
are "price-affected investments" in relation to inside information,
and inside information is "price-sensitive information" in relation
to investments, if and only if the information would, if made
public, be likely to have a significant effect on the price of the
investments.

(3) For the purposes of this section "price" includes value.

"Insiders"
405J (1) For the purposes of sections 405B to 405I, a
person has information as an insider if and only if —

(a) it is, and he knows that it is, inside information;
and

(b) he has it, and knows that he has it, from an
inside source.

(2) For the purposes of subsection (1), a person has
information from an inside source if and only if—

(a) he has it through—

(i) being a director, employee or
shareholder of an issuer of investments;
or

(ii) having access to the information by
virtue of his employment, office or
profession; or

(b) the direct or indirect source of his information is
a person within paragraph (a).

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Information "made public"
405K (1) For the purposes of section 405I, "made public",
in relation to information, shall be construed in accordance with
the following provisions of this section; but those provisions are
not exhaustive as to the meaning of that expression.

(2) Information is made public if—

(a) it is published in accordance with the rules of a
recognised investment exchange for the purpose
of informing investors and their professional
advisers;

(b) it is contained in records which by virtue of any
enactment are open to inspection by the public;

(c) it can be readily acquired by those likely to deal
in any investments—

(i) to which the information relates; or

(ii) of an issuer to which the information
relates; or

(d) it is derived from information which has been
made public.

(3) Information may be treated as made public even
though—

(a) it can be acquired only by persons exercising
diligence or expertise;

(b) it is communicated to a section of the public and
not to the public at large;

(c) it can be acquired only by observation;

(d) it is communicated only on payment of a fee; or

(e) it is published only outside Bermuda.

Other interpretation provisions
405L(1) For the purposes of sections 405B to 405K, "recognised
investment exchange" means an investment exchange in relation
to which a recognition order is in force under the Investment
Business Act 2003.

(2) For the purposes of sections 405B to 405K an "issuer" ,
in relation to any investments, means any company, public

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sector body or individual by which or by whom the investments
have been or are to be issued.

(3) For the purposes of sections 405B to 405K, 405N and
this section —

(a) "company" means any body (whether or not
incorporated and wherever incorporated or
constituted) which is not a public sector body;
and

(b) "public sector body" means —

(i) the government of Bermuda or of any
country or territory outside Bermuda;

(ii) a local or municipal authority in
Bermuda or elsewhere;

(iii) any international organisation the
members of which includes the United
Kingdom or Bermuda;

(iv) the Bermuda Monetary Authority; or

(v) the central bank of any state or
territory.

(4) For the purposes of sections 405B to 405K, information
shall be treated as relating to an issuer of investments which is a
company not only where it is about the company but also where
it may affect the company's business prospects.

Penalties and prosecution
405M (1) An individual guilty of insider dealing shall be
liable

(a) on summary conviction to a fine of $25,000 or to
imprisonment for two years or both;

(b) on conviction on indictment to a fine of
$175,000 or to imprisonment for 7 years or
both.

(2) Proceedings for offences under section 405B shall not be
instituted except by or with the consent of the Director of Public
Prosecutions.

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Limits on section 405B
405N (1) Section 405B does not apply to anything done
by an individual acting on behalf of a public sector body in
pursuit of monetary policies or policies with respect to exchange
rates or the management of public debt or foreign exchange
reserves.

(2) No contract shall be void or unenforceable by reason
only of section 405B.".

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