Insider Dealing
A person/parties have price sensitive information about a company’s performance and deals in shares of that company in order to make a profit
Forms
The insider deals with shares and makes use of information which is not generally available
The insider makes his knowledge known to an outsider who uses this knowledge to deal with shares, where the outsider should have known was precluded from dealing with the shares because of his access to the sensitive information
Insider: any person possessing inside information due to
Having access to the information through the exercise of his employment/duties
Criminal activities
Holding capital in the company
Any person who possesses the inside information concerned where the person knows/ought to have known that it is inside information
His membership of the administrative/management/supervisory bodies of the company issueing the financial instrument
Insider Information
Information that relates to the issuer of the securities or the securities themselves
Information that is price sensitive and if disclosed, is likely to materially affect the price of the securities being traded
Information that has not yet been made public
Information that a reasonable investor would be likely to use as part of their investment decision
Information that is of precise nature
Information that is specific enough to enable a conclusion to be drawn as to the possible effect of that information on the prices of the financial instruments or related derivative financial instruments
Financial instruments
Can be created, traded, modified and settled
Examples
Monetary contracts between parties
Evidence of an ownership interest in an entity (share)
Contractual right to receive or deliver cash (bond)
Cash (currency)
Transferable securities
Prohibited Actions
Sanctions
The disclosure of insider information
Inducing another person to use/disclose insider information
The use of insider information
Criminal: imprisonment for a term up to 10 years and/or fine up to €10 million
If committed by a company officer, the ODCE may seek a disqualification order
Civil: if found guilty, they must compensate any other party who was not in possession of the relevant information and compensate the company for any profits made