6. Market Abuse & Insider Dealing

Question 1

Which offence is a civil offence for insider dealing

Answer 1

14 MAR

Question 2

What procedure must be followed if sounding out Ms/potential investors to avoid being liable under 14 MAR

Answer 2

11(3) - (7) MAR

Question 3

Where is ‘engaging in ID’ defined for 14 MAR

Answer 3

8(1)

Question 4

What test do you use to work out if ‘significant effect’ on price from II

Answer 4

Reasonable investor test under 7(4)

Question 5

How is ‘inside source’ defined for 52 CJA

Answer 5

E.g. D of issuer or access through employment/profession

Question 6

What consequences are there for the firm if insider dealing

Answer 6

Breach confidentiality Uts in letter of engagement, and issuer may sue firm

Question 7

What two markets are included in ‘RM’ for 52(1) CJA

Answer 7

MM and AIM

Question 8

What are the penalties for committing offence under 52 CJA

Answer 8

Fine and/or imprisonment for up to 7 years

Question 9

Why will issuer have included confidentiality UTs in LoE w/ firm

Answer 9

To comply w/ 17(8) MAR (selective disclosure)

Question 10

Why is 52 CJA less commonly used

Answer 10

Standard of proof is criminal BRD

Question 11

Definition of II under 7 MAR

Answer 11

Precise, not public, relate to shares, ‘significant effect’ on price

Question 12

What other consequences may there be for individual who engaged in ID, beyond civil/criminal offence

Answer 12

Breach of mandatory principles + Ch.4 CoC (if S), as well as confidential provisions of employment contract

Question 13

Which offence is a criminal offence for insider dealing

Answer 13

52 CJA

Question 14

Where are the defences to 52 CJA

Answer 14

53

Question 15

How is ‘insider’ defined for 52 CJA

Answer 15

Subjective - if knows II from inside source

Question 16

What are the offences under 14 MAR

Answer 16

Engaging, recommending/inducing ID or unlawfully disclosing

Question 17

Where is ‘unlawfully disclosing II’ defined for 14 MAR

Answer 17

10(1)

Question 18

What two possible offences apply if insider dealing

Answer 18

52 CJA and 14 MAR

Question 19

When will it not be considered ‘unlawful disclosure’ for the purposes of 10(1) MAR

Answer 19

If sounding out selected Ms/potential investors + follow 11(3) - (7) MAR

Question 20

What are the defences under 9 MAR

Answer 20

Legit behaviours, e.g. info barriers

Question 21

What part of CJA defines ‘inside info’

Answer 21

56

Question 22

How is ‘inside info’ defined for 52 CJA

Answer 22

Similar to 7 MAR - particular shares, specific/precise info, not public + significant effect on price

Question 23

Geographical limit on 52 CJA

Answer 23

Individual must be in UK, or market is UK RM

Question 24

Where are the penalties for 52 CJA

Answer 24

61

Question 25

Where is 'insider' defined for 52 CJA

Answer 25

57(1)

Question 26

Under what provision is FCA empowered to enforce breaches of MAR

Answer 26

Article 23

Question 27

Restitution orders under what provisions

Answer 27

383 - 386 FSMA

Question 28

What offence is also likely if encouraging another to deal on II

Answer 28

Disclosing

Question 29

Where is 'recommending/inducing ID' defined for 14 MAR

Answer 29

8(2)

Question 30

What has there been a shift towards recently by FCA to do with II and ID

Answer 30

Towards criminal prosecutions - 89 FSA (false impression) and 52 CJA

Question 31

How do the defences apply to 52 CJA

Answer 31

They are offence specific

Question 32

Where are the defences to 14 MAR

Answer 32

9 MAR

Question 33

What other powers does FCA have for breach of **Article 14**, other than enforcement powers under 122 - 123 FSMA

Answer 33

Restitution orders

Question 34

Where is 'inside source' defined for 52 CJA

Answer 34

57(2)

Question 35

What provision defines geographical limits on 52 CJA

Answer 35

62 CJA

Question 36

Why can issuer sue firm of individual who engaged in ID for BoC

Answer 36

C would have ensured people on insider list acknowledged duties (per 18(2)) + would have included as term in LoE

Question 37

If a legit behaviour under 9 MAR is proven, what happens

Answer 37

Burden falls on FCA to prove individual did engage in ID

Question 38

What are the offences under 52 CJA

Answer 38

Dealing, encouraging and disclosing inside info

Question 39

Where are FCA's enforcement powers for breach of MAR

Answer 39

122A - I and 123 FSMA

Question 40

Which offence for ID only applies to individuals

Answer 40

52 CJA

Question 41

What provision gives circumstances in which individual must have obtained II to be liable under 14 MAR

Answer 41

8(4) MAR

Question 42

When does Article 14 MAR aply

Answer 42

If person has II due to being e.g. D of issuer or through employment

Question 43

What provision gives definition of II for 14 MAR

Answer 43

7

Question 44

What powers generally apply whenever **MAR** has been breached

Answer 44

122 + 123 FSMA

Question 45

What FCA power only applies for breach of **Article 14 MAR**

Answer 45

Restitution orders under **383** - **386**

Question 46

Under 123(2) FCA can do what

Answer 46

Unlimited fine

Question 47

Under 123(3) FCA can do what

Answer 47

Issue statement censuring

Question 48

8(4) MAR for possessing inside info applies to which offences under 14

Answer 48

All of them