Chapter 22 Fraudulent and Criminal Behaviour Flashcards
What is an inside information?
A ‘price sensitive’ information relating to a particular issuer of securities that are price affected and not to securities generally
To prove an insider dealing, what the prosecution must prove?
Must prove the possessor of the information:
1)Dealt in price affected securities on a regulated market
2)Encouraged another to deal in them on a regulated market
3)Disclosed the information other than in the proper performance of their employment
What is the penalty for insider trading?
Maximum penalties given by the statute are seven years’ imprisonment and/or an unlimited fine
What is market distortion?
Any behaviour that interferes with the normal process of market prices moving up and down in accordance with supply and demand
What is money laundering?
An attempt to make money from criminal activity appear legitimate by disguising its original source
What are the three categories of offences relating to money laundering?
1)Laundering
2)Failure to report
3)Tipping off
How many phases the money laundering process usually involves?
3 phases, namely
1)Placement
2)Layering
3)Integration
What is the penalty for laundering and failure to report?
For laundering 14 years’ imprisonment and/or a fine AND for failure to report 5 years’ imprisonment and/or a fine
What are the factors that must be taken into account for establishing an internal control system to identify money laundering?
1)Risk management practices
2)Internal controls
3)Customer due diligence 4)Reliance and record keeping procedures
5)Monitoring and management of compliance
What are the four main offences created by the Bribery Act?
1)Bribing another person
2)Being bribed
3)Bribing a foreign public official
4)Corporate failure to prevent bribery
*First three are committed by individuals and fourth one is a corporate offence
What is the penalty for bribery?
Maximum penalty under the Act is ten years’ imprisonment and/or an unlimited fine
What is the defence against the offence ‘corporate failure to prevent bribery’?
If the organisation can prove that it had in place ‘adequate procedures’ designed to prevent persons associated with it from committing bribery
What are the six principles on which secretary of state’s non prescriptive published guidance on adequate procedure is based?
1)Preventive procedures
2)Top level commitment
3)Risk assessment
4)Due diligence
5)Communication
6)Monitoring and review
What are the criminal offences in relation to winding up?
Declaration of solvency without reasonable grounds and fraudulent trading
