A more recent version of these Insider Dealing Crib Sheet notes – written by Cambridge And Oxilp And College Of Law students – is available here.
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Insider Dealing 1) Rationale a. Lord Lane in Attorney-General's Reference (No1 of 1988) - "the clear intention is to prevent, as far as possible, what amounts to cheating when those with inside knowledge use that knowledge to make a profit in their dealings with other" a.i. A company cannot commit the offence directly 2) Offences a. Primary Offence a.i. 52(1) CJA 1993 an individual who has inside information as an insider deals in securities that are price-affected securities in relation to the information and the dealing occurs on a regulated market a.i.1. 60(1) defines a regulated market by referring to the Insider Dealing (Securities and Regulated Markets) Order 1994 a.i.1.a. Regulated market includes the Main Market and AIM a.i.2. 54(1)(a) Securities are those which fall within Schedule 2 CJA a.i.2.a. INCLUDES SHARES a.i.3. 56(2) Securities are price affected securities in relation to inside information and inside information is "price sensitive information" in relation to securities if the information would, if made public, be likely to have a significant effect on the price of the securities b. Secondary Offences b.i. 52(2)(a) CJA 1993 an individual who has inside information as an insider encourages another person to deal in securities that are price affected securities in relation to that information knowing or having reasonable cause to believe that they would deal in them b.ii. 52(2)(b) CJA 1993 an individual discloses the information, otherwise than in the proper performance of the function of his employment, office or profession to another person 3) What is inside information?
a. 56 CJA 1993 inside information is information which a.i. Relates to particular securities or to a particular issuer of securities a.i.1. Includes information which may affect a company's prospects a.i.2. 60(2) an issuer means any company by which securities have been or are to be issued a.i.2.a. 60(3)(a) a company means any body which is not a public sector body a.ii. Is specific or precise a.iii. Has not been made public a.iii.1. 58(2) information is made public if a.iii.1.a. It is published in accordance with the rules of a regulated market for the purpose of informing investors and their professional advisers a.iii.1.b. It is contained in records which by virtue of any enactment are open to inspection by the public a.iii.1.c. It can be readily acquired by those likely to deal in any securities to which the information relates or of an issuer to which the information relates a.iii.1.d. It is derived from information which has been made public a.iv. If it were made public, it would be likely to have a significant effect on the price of any securities 4) Who is an insider?
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