Incorrect sublists handle

Wikimarkup is handling sublists in an incorrect form:

* List item
** Sublist item

Is transformed into:

<ul>
  <li>List item
  <ul>
    <li>Sublist item</li>
  </ul>
  </li>
</ul>

But <ul> tag shouldn't be inside an <li> tag, the correct form is:

<ul>
  <li>List item</li>
  <ul>
    <li>Sublist item</li>
  </ul>
</ul>