SGS 7 (Continuing Obligations)

Question 1

What is the starting point for the release of inside information?

Answer 1

Art 17(1) MAR.

Question 2

Where does one look for ‘legitimate interest’ in terms of Art 17(4) MAR?

Answer 2

Recital 50 MAR and ESMA guidelines.

Question 3

If you are delaying disclosure under MAR 17(4) what must you prepare?

Answer 3

A holding announcement under DTR 2.6.3G.

Question 4

In the event of a breach of MAR, where are the FCA’s enforcement powers set out?

Answer 4

ss.122A to 122I FSMA.

Question 5

Aside from s.123 FSMA and s.122G what other sanctions are there in relation to failure to disclose information under MAR?

Answer 5

Directors guilty under ss2 and 3 Fraud Act 2006

ss 89 and 90 FSA 2012

s.90A and Sch 10A FSMA

Question 6

Structure of an insider dealing question?

Answer 6

Individual? (i.e. natural person not legal person such as a company)

Offences under s.52?

Insider?

Insider information?

Defences?

Question 7

What provision of MAR is relevant to insider dealing?

Answer 7

Article 14.

Question 8

What is the structure of a market abuse insider dealing question?

Answer 8

Legal person
possesses insider information
Committed an offence
Legitimate behaviour defence?

Question 9

Where can the penalties for a market abuse insider dealing offence be found?

Answer 9

s. 123 FSMA

ss. 383-386 FSMA

Question 10

What other things should you consider if you find that a person has committed an insider dealing offence?

Answer 10

Individual:
Breach of employment contract

breach of mandatory principles and chapter 4 SRA code of conduct.

Firm:
breach of law firm’s retainer / engagement letter with client (likely to have contained confidentiality undertakings in accordance with MAR 17(8)).

Insider lists

Question 11

Insider Lists?

Answer 11

Issuer must draw up a list of persons who have access to inside information.
Issuers must also take all reasonable steps to ensure that persons on insider lists acknowledge in writing the duties entailed and are aware of the sanctions applicable to insider dealing.

Question 12

Insider lists and liability for insider dealing?

Answer 12

Consider 18(2) - has issuer complied with this and if so, if breach committed by someone in law firm and a condition of the retainer was 18(2) company could potentially sue law firm for breach of contract if it were fined by FCA for breach of MAR or suffers loss as a result of leak.

Question 13

What is a PDMR?

Answer 13

A person discharging managerial responsibility (Art 3(1)(25) MAR.

Question 14

What are the disclosure obligations under MAR after a sale of shares?

Answer 14

PDMR who sold them: notify issuer and FCA within 3 business days.

Issuer notifies RIS no later than 3 business days.

Question 15

What are the disclosure obligations by shareholder under DTRs after a sale of shares?

Answer 15

Notify the issuer if shareholding:
Reaches, exceeds or falls below 3%; or

Changes by 1% upwards or downwards, between 3% and 100%.

If shares traded on LSE, file a copy of notification with FCA.

Question 16

What are the disclosure obligations by issuer under DTRs after a sale of shares?

Answer 16

Notify RIS of notification received from shareholder asap, by end of the trading day following receipt.

Question 17

What can the FCA do in the event of a leak?

Answer 17

Launch an enquiry

Ask co and advisers to produce copies of insider lists (details who knew of inside info and when they became aware of such)

Enforcement and regulatory powers set out in ss. 122A to 122I FSMA.

Question 18

What are the defences to insider dealing under MAR?

Answer 18

Information barriers, Art 9(1)

pre-existing commitment, Art 9(3)

Dealer’s own intention, Art 9(5)

If person can demonstrate any of these, for FCA to prove that person has engaged in insider dealing

Question 19

When doing a closed periods question, what should you additionally consider?

Answer 19

Any insider dealing

Question 20

What records relating to a delay need to be kept?

Answer 20

Notification form to FCA should include

dates and times inside info existed and when decision to delay was made

identity of persons within issuer responsible for making decision to delay disclosure

Question 21

when is DTR 2.2.9 relevant?

Answer 21

Where confidentiality no longer assured (press rumour) leads to confidentiality of info no longer being assured.
Disclose info to market asap, prepare leak announcement, detailing as much info as possible and why fuller announcement can’t be made now.