5. Market abuse Flashcards
(28 cards)
what is market abuse
civil offence originally governed by FSMA, now by MAR
which offences does MAR supplement
misleading statements/ impressions;
insider dealing
definition of market abuse
certain behaviour relating to certain investments which trade / seek to trade on certain markets which is deemed unlawful
3 main offences
insider dealing
unlawful disclosure of inside info
market manipulation
what does mar 14 prohibit
engaging in insider dealing
attempting to engage in insider dealing
recommending another to engage
inducing another to engage
what is inside info
info of a precise nature;
which has not been made public;
relating to (directly/indirectly) an aissuer of financial instrument or to the financial instrument itself
if generally available, would likely have a significant effect on FI price
to whom does the offence of insider dealing apply to
people who possess inside info as a result of being
board director
sh
through exercise of profession, employment or duties
factors in determining whether a person possesses inside info
if normal and reasonable person in the position of the one with inside info would / should have known that they received it from an insider
art 9 legitimate behaviour
dealing is to satisfy an obligation which arose before the relevant person had inside information
inside information is person’s own intention to deal and they carry out that intention
where a bidder in a takeover offer has obtained inside info in connection with that offer and uses it solely for the purposes of proceeding with the offer
what does art 14(c) prohibit
unlawful disclosure of inside information
what is unlawful disclosure? art 10(1)
where a person possesses inside info and discloses that info to any other person, except where the disclosure is made in the normal exercise of an employment, a profession, or duties
to whom does the offence of unlawful disclosure of inside info apply? 8(4)
people who possess inside info as a result of
being a member of the board of directors of the co
being a shareholder in the co
having access to info through exercise of employment, profession or duties
being involved in criminal activities
anyone who knows or ought to know that it is inside info
considerations in determining whether a person who possesses inside info ought to know that it is inside info
a normal and reasonable person would know or should have known that the person from whom they received it is an insider;
a normal and reasonable person would or should have known that it is inside info
which factors are taken into determination when considering whether disclosure is in the normal exercise of employment, profession, or duties
whether disclosure is permitted by FCA rules
whether disclosure is accompanied by imposition of confidentiality and is:
reasonable to enable person to perform proper functions of their employment
reasonable for the purposes of facilitating any commercial, financial or investment transaction (including prospective underwriters
reasonable, for obtaining a commitment or expression of support in relation to an offer subject to takeover code
in fulfilment of a legal obligation, including to employee representatives or trade unions acting on their behalf
what can the fca do if they suspect market abuse has occured
investigate the issue under pat VIII FSMA
sanctions the fca can impose
unlimited fine s123(1)(a)
public statement censuring a person
suspension of trading
temporary ban on individual from selling buying financial instruments
require co, PDMRs and OCA to provide info FCA reasonably requires for protection of investors
apply to court for injunction
require person to pay back profits made or losses avoided
require compensation of victims
which regulation contains the insider dealing provisions?
Part V CJA 1993
what does s52 CJA stipulate
an offence of insider dealing can be committed, if an individual who has information as an insider
a) deals in price-affected securities when in possession of inside info
b) encourages another to deal in price-affected securities
c) discloses inside information other than in the proper performance of their employment
what constitutes an insider s57(1) CJA
a) a person has information which is inside information
b) has received that information from an inside source
c) they know a & b
what is inside information per s56 CJA
information which relates to particular, rather than general securities
is specific or precise
has not been made public
is price-sensitive
what consitutes info from an inside source? s57(2)
are an inside source (that is, a director, employee, or SH) of an issuer of securities for our purposes, a company but not necessarily the company whose securities are the subject of insider dealing; or
have access to the information because of their employment, office, or profession; or
obtained the information from someone who obtained it by way of (a) or (b)
whatre the 3 ways in which the offence can be committed?
s52 dealing in price-affected securities on a regulated market or by / through a professional intermediary
s52(2)(a) encouraging another to deal
s52(2)(b) disclosing inside info to another
what is meant by dealing s55
acquisition, or disposal of securities
agreement to acquire securities
any agreement to create securities
procuring an acquisition or disposal of securities by any other person
how are securities defined in s54 & sch 2 CJA
wide definition - includes shares, bonds, warrants, options
