---
title: "Check a statement for the prohibition on false or misleading statements"
url: "https://ailawframework.com/practice/financial-services-regulation/check-a-statement-for-the-prohibition-on-false-or-misleading-statements"
type: "task"
site: "AI Law Framework"
id: "A28-MA20261022-9"
practice_area: "Financial Services Regulation (AFSL/ASIC/credit)"
tier: "yellow"
lawyer_review: "required"
last_reviewed: "2026-10-22"
---

# Check a statement for the prohibition on false or misleading statements

> Extract the statement or the information disseminated, whether it is said to be false in a material particular or materially misleading, and which of the subsection (1)(b) effects is alleged: inducing persons in this…

Canonical page: https://ailawframework.com/practice/financial-services-regulation/check-a-statement-for-the-prohibition-on-false-or-misleading-statements  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Financial Services Regulation (AFSL/ASIC/credit)](https://ailawframework.com/practice/financial-services-regulation.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| How AI is used | Extract the statement or the information disseminated, whether it is said to be false in a material particular or materially misleading, and which of the subsection (1)(b) effects is alleged: inducing persons in this jurisdiction to apply for financial products, inducing them to dispose of or acquire financial products, or increasing, reducing, maintaining or stabilising the price for trading in financial products on a financial market operated in this jurisdiction. Record what the file says the person knew or whether the person is said not to have cared if the statement was true or false. Do not find the fault element. Do not say an offence has been committed. |
| What the lawyer must review | Decide whether section 1041E applies and whether there is a defence. A person must not, in this jurisdiction or elsewhere, make a statement or disseminate information if it is false in a material particular or materially misleading, it is likely to have one of the inducing or price effects in subsection (1)(b), and when it is made the person does not care whether it is true or false, or knows or ought reasonably to have known that it is false in a material particular or materially misleading. Failure is an offence under subsection 1311(1). The note points to defences in Division 4, which was not the text opened. It may also lead to civil liability under section 1041I. For an offence, paragraph (1)(a) takes its fault element from paragraph (1)(c), and strict liability applies to the three subparagraphs of (1)(b). Read Division 4 before advising that no defence is open. This is a different test from section 1041H. |
| Written for / versions | 1 jurisdiction versions below |

## Checking plan

**Source-by-source verification**

Trace relied-on content to independent sources and check for relevant material the output has missed.

- What the AI does: Extract the statement or the information disseminated, whether it is said to be false in a material particular or materially misleading, and which of the subsection (1)(b) effects is alleged: inducing persons in this jurisdiction to apply for financial products, inducing them to dispose of or acquire financial products, or increasing, reducing, maintaining or stabilising the price for trading in financial products on a financial market operated in this jurisdiction. Record what the file says the person knew or whether the person is said not to have cared if the statement was true or false. Do not find the fault element. Do not say an offence has been committed.
- What the lawyer does: Decide whether section 1041E applies and whether there is a defence. A person must not, in this jurisdiction or elsewhere, make a statement or disseminate information if it is false in a material particular or materially misleading, it is likely to have one of the inducing or price effects in subsection (1)(b), and when it is made the person does not care whether it is true or false, or knows or ought reasonably to have known that it is false in a material particular or materially misleading. Failure is an offence under subsection 1311(1). The note points to defences in Division 4, which was not the text opened. It may also lead to civil liability under section 1041I. For an offence, paragraph (1)(a) takes its fault element from paragraph (1)(c), and strict liability applies to the three subparagraphs of (1)(b). Read Division 4 before advising that no defence is open. This is a different test from section 1041H.
- Who reviews: Responsible lawyer with competence in the matter
- Basis: Practical workflow informed by the linked primary sources; the traffic light and working checks are editorial guidance, not a court classification.
- Why: The level reflects what the work is, the consequence of an error, and how much of the output the lawyer must independently re-derive.

## Checks the lawyer makes

1. Quote the statement. Record which subsection (1)(b) effect is in issue. Do not invent one.
2. Do not find that the person knew, ought to have known, or did not care.
3. Do not treat the strict-liability note on subsection (1)(b) as removing the fault element in subsection (1)(c).
4. The lawyer reads the Division 4 defences before any advice that the prohibition applies.

## Notes

- These are suggested working checks. Confirm the required checking with the responsible lawyer before work starts; the checking approach does not establish permission to use AI.

## Sources

- [Corporations Act 2001 (Cth), section 1041E](https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1041e.html) (checked 2026-10-22)

## Jurisdiction versions

| Jurisdiction | Level |
| --- | --- |
| [United States](https://ailawframework.com/practice/financial-services-regulation/check-a-statement-for-the-prohibition-on-false-or-misleading-statements/united-states.md) | Yellow |

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*