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Insider Dealing (Price affected securities as listed in Schedule 2 of the…
Insider Dealing
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Insider dealing offences
- Dealing in securities on the basis of inside information
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3.Disclosing inside information otherwise than in the proper performance of the functions of employment or profession
For an offence to have been committed, the acquisition or disposal must have occurred on a regulated market or if the person relies on or is acting as professional intermediary
No offence is committed if the insider did not know that the information was 'inside information'. The information must have been obtained by virtue of being a director, employee or shareholder of an issuer or securities (or by the direct or indirect source of information is one of these people) or by having access to the information by virtue of their employment, office or profession
Insider dealing defences
Under Article 53 of the Criminal Justice Act, an individual will not be guilty of insider dealing, if in relation to the dealing offence or the encouraging another person to deal offence, they can show that:
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Believed (on reasonable grounds) that the information had been disclosed widely enough that none of those taking part in the dealing would be prejudiced by not having the information
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In relation to the disclosure of information offence, it is a defence to show that they did not expect:
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Penalties
Maximum penalty for an individual convicted of insider dealing is a fine or imprisonment for a term not exceeding seven years, or both
A criminal offence under the Criminal Justice Act 1993, which came into force on 1 March 1994
Occurs when an individual with inside information (price sensitive information) uses this information in relation to securities that are price affected, in order to make a profit or avoid a loss, thus gaining an advantage that would not be available to the general public
Inside Information: Information which relates to particular securities, is specific or precise, has not been made public and if it were made public, would be likely to have a significant effect on the price of any securities