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Insider Dealing - Coggle Diagram
Insider Dealing
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Criminal Justice Act
Dealing in shares on a regulated market while in possession of price sensitive information is a criminal offence
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The insider must either know that they possess inside information or knowingly acquire inside information from an inside source
It is no longer necessary for the insider to be connected with the particular company, a person can be an insider simply by having access to inside information. Accordingly, the husband or wife of a director could be convicted if using inside information passed on by their spouse and any friends could also be guilty of an offence if they dealt in shares on the basis of inside information gained directly from the director or indirectly from the spouse or some other third party
The definition of securities covers not only shares, debentures and debt securities but also their derivatives
Any transactions on a regulated market and any deals undertaken via professional intermediaries whether or not through a regulated market will be covered
Deals of a purely private nature, even on the basis of inside information will not normally be covered by the legislation
The inside information must be specific, relate to the company whose securities have been dealt and must not be public knowledge. It must also be shown that if that information were to have been made public, it would have had a signficiant effect on the price of the securities concerned
The defences against a charge of insider dealing are set out in CJA1993 s.53 and include that the person
Did not expect the dealing to result in a profit attributable to the information being price sensitive
Had reasonable grounds for believing that the other party to the deal was also in possession of the information
Would have dealt irrespective of whether or not they had been in possession of the price sensitive information