Insider Dealing and Misleading Statements and Impressions

Question 1

Insider Dealing

Answer 1

CJA 1993, criminal offence, intent, beyond all reasonable doubt, 10yr and/or unlimited fine

Question 2

misleading statements and impressions

Answer 2

FSA 2012, criminal offence, intent, beyond all reasonable doubt, 10yr and/or unlimited fine

Question 3

market abuse

Answer 3

civil offence, effect, balance of probability, unlimited fine

Question 4

Insider Dealing Criminal offences

Answer 4

Dealing on…
Encouraging others to deal on
Disclosure of…

Question 5

Insider Information

Answer 5

Relates to particular securities/issuers Specific or precise
Has not been made public Price sensitive

Question 6

Scope of insider dealing

Answer 6

Any financial instrument defined under MIFID

Question 7

Excluded Investments

Answer 7

Bank accounts
Commodity spot markets
Spot and forward FX
Insurance products

Question 8

Insider Dealing: General Defences

Answer 8

Did not expect the deal to result in a profit (or avoid a loss) due to the information
Believed on reasonable grounds that the information was already publicly available
Would have acted in the same way regardless of possessing the information
Did not expect the recipient to deal

Question 9

Special Defences

Answer 9

Price stabilisation rules
Market information
Market makers in the ordinary course of business

Question 10

Enforcement

Answer 10

LSE monitors transaction
FCA prosecutes

Question 11

Misleading Statements and Impressions

Answer 11

S89 Misleading statements, e.g. lying to persuade someone to deal, concealing relevant facts in takeover documents, etc.
S90 Misleading impressions, e.g. abusive squeezes, market rigging - Covers both recklessly created misleading impressions, and deliberately created
misleading impressions
S91 Misleading statements in relation to benchmarks

Question 12

Misleading statements and impressions: Defences

Answer 12

Reasonably believed that statement or act was not false or misleading
Acted in conformity with price stabilising rules or control of information rules
(Chinese walls)

Question 13

UK Market Abuse Regulation

Answer 13

A person shall not: * Engage or attempt to engage in insider dealing
- Includes amending and cancelling orders
Recommend or induce another person to engage in insider dealing Unlawfully disclose inside information
- A person shall not engage in or attempt to engage in market manipulation

Question 14

Penalties

Answer 14

• Civil in UK
• Lighter burden of proof
• Effect-based