Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 1239

1239. (1) Subject to this Part, where:
(a) a person (in this subsection called the "futures person") suffers
pecuniary loss at a particular time because of a defalcation, or because of
fraudulent misuse of money or other property, by:

        (i)    a person who is at that time a contributing member of a futures
               organisation;

        (ii)   a director, partner, officer or employee of a person who is at
               that time a contributing member of a futures organisation; or

        (iii)  a partner in, or employee of, a partnership that is at that
               time a contributing member of a futures organisation; and

   (b)  the loss is suffered in respect of money or other property that was,
        in connection with the contributing member's dealings in futures
        contracts (whether or not any of those dealings was effected on a
        futures market), entrusted to or received by the contributing member,
        or a director, partner, officer or employee of the contributing member
        (whether before or after the commencement of this section):

        (i)    for or on behalf of the futures person or another person; or

        (ii)   because the contributing member was trustee of the money or
               other property; the fidelity fund of the futures organisation
               shall be applied for the purpose of compensating the futures
               person.

(2) The reference in paragraph (1) (b) to a partner of a contributing member
of a futures organisation is, in a case where the contributing member is a
partnership, a reference to a partner in the partnership.

(3) Subject to this Part, where a right to compensation does not arise under
subsection (1), a fidelity fund of a futures organisation may, if the board of
the futures organisation thinks fit, be applied for the purpose of paying to
an official receiver or trustee within the meaning of the Bankruptcy Act 1966
an amount not greater than the amount that the official receiver or trustee,
as the case may be, certifies is required in order to make up or reduce the
total deficiency arising because the available assets of a bankrupt who is a
contributing member of the futures organisation are insufficient to satisfy
the debts arising from dealings in futures contracts that have been proved in
the bankruptcy by creditors of the bankrupt.

(4) Subsection (3) applies in the case of a contributing member of a futures
organisation who has made a composition with the member's creditors, or has
executed a deed of assignment or a deed of arrangement, under Part X of the
Bankruptcy Act 1966 in like manner as that subsection applies in the case of a
contributing member of a futures organisation who has become bankrupt and, for
the purposes of that subsection as so applying by virtue of this subsection:

   (a)  the reference in that subsection to a trustee shall be deemed to be a
        reference to a controlling trustee within the meaning of that Part;

   (b)  the reference to debts proved in the bankruptcy shall be deemed to be
        a reference to provable debts in relation to the composition or deed
        within the meaning of that Part; and

   (c)  a reference to the bankrupt shall be deemed to be a reference to the
        person who made the composition or executed the deed.

(5) Subject to this Part, where a right to compensation does not arise under
subsection (1), a fidelity fund of a futures organisation may, if the board of
the futures organisation thinks fit, be applied for the purpose of paying to
the liquidator of a body corporate that is a contributing member of the
futures organisation and that has commenced to be wound up, an amount not
greater than the amount that the liquidator certifies is required to make up
or reduce the total deficiency arising because the available assets of the
body corporate are insufficient to satisfy the debts of the body corporate
arising from dealings in futures contracts that have been proved in the
winding up by creditors of the body corporate.

(6) Money paid pursuant to subsection (3) or (5) is so paid only on condition
that it is applied by the official receiver, trustee or liquidator towards
satisfaction of debts arising from dealings in futures contracts and for no
other purpose.

(7) Subject to subsection (9), the amount, or the sum of the amounts, paid
under this Part out of a fidelity fund of a futures organisation:

   (a)  for the purpose of compensating pecuniary loss as mentioned in
        subsection (1); or

   (b)  for the purpose of making payments under subsection (3) or (5); shall
        not exceed, in respect of a particular contributing member of the
        futures organisation:

   (c)  unless paragraph (d) applies-$500,000; or

   (d)  if some other amount is prescribed, for the purposes of this
        subsection, in relation to the futures organisation, a class of
        futures organisations that includes the futures organisation, or
        futures organisations generally-that amount.

(8) For the purposes of calculating the sum referred to in subsection (7), an
amount that is paid from a fidelity fund shall, to the extent to which that
amount is repaid to the fund, be disregarded.

(9) If a futures organisation considers, having regard to the ascertained or
contingent liabilities of its fidelity fund, that the assets of the fund so
permit, the futures organisation may apply out of the fund such sums in excess
of the amount limited by or under this section as the futures organisation, in
its discretion, thinks fit in or towards the compensation of persons who have
suffered pecuniary loss as mentioned in subsection (1) or making a payment
under subsection (3) or (5).

(10) Where:

   (a)  money or other property has been entrusted to, or received by:

        (i)    a person or partnership;

        (ii)   a director, partner, officer or employee of a person; or

        (iii)  a partner in or employee of, a partnership;
being a person who, or a partnership that, has at any time been but is no
longer a contributing member of a futures organisation;

   (b)  immediately before that person or partnership last ceased to be a
        member or member organisation of the futures organisation, he, she or
        it was a contributing member of the futures organisation;

   (c)  because of a defalcation, or the fraudulent misuse of money or other
        property by:

        (i)    that person or a director, partner, officer or employee of that
               person; or

        (ii)   a partner in, or employee of, that partnership;
as the case may be, the person by or from whom the money or other property was
so entrusted or received suffered pecuniary loss; and

   (d)  at the time when the money or other property was so entrusted or
        received, the person suffering the pecuniary loss believed, on
        reasonable grounds, that that person or partnership was at that time a
        member or member organisation of the futures organisation; that person
        or partnership shall, for the purposes of this section (other than
        this subsection and subsection (11)), be deemed to have been, when the
        pecuniary loss was suffered, a contributing member of the futures
        organisation.

(11) Where:

   (a)  a person who or a partnership that has at any time been, but is no
        longer, a contributing member of a futures organisation has incurred a
        debt arising from dealings in futures contracts; and

   (b)  at the time when the debt was incurred, the creditor, or one or more
        of the creditors, in relation to the debt believed on reasonable
        grounds that that person or partnership was at that time a member or
        member organisation of the futures organisation; a reference in this
        section (other than subsection (10) and this subsection) to a
        contributing member of the futures organisation shall, for the purpose
        of determining the application of subsection (3) or (5) in relation to
        that creditor or those creditors, as the case may be, in relation to
        that debt, be deemed to include a reference to that person or
        partnership.

(12) A reference in this section to a defalcation, or to a fraudulent misuse
of money or other property, is a reference to a defalcation, or to such a
fraudulent misuse, wherever and whenever occurring.