Insider dealing is a criminal offence (‘the offence’) governed by sections 52 and 53 of the Criminal Justice Act 1993 (‘the Act’).
The Offence | Kangs Criminal Advisory Solicitors
Section 52 of the Act provides that a person is guilty of the offence if he:
- has information as an insider and deals in securities that are price- affected securities in relation to that information where the acquisition or disposal in question occurs on a regulated market, or that the person dealing relies on a professional intermediary or is himself acting as a professional intermediary.
- encourages another to deal in securities that are price affected securities in relation to the information, whether or not that other person is aware they are price affected, knowing or having reasonable cause to believe the dealing occurs on a regulated market or that the person dealing relies on a professional intermediary or is himself acting as a professional intermediary.
- passes the information on to another in circumstances which are not part of the proper performance of their employment, position or profession.
What Information Is Relevant? | Kangs Criminal Lawyers
Any Information that, if made public, is likely to have a significant effect of the price of the security in question which may include advance notice of:
- information in regard to a company’s performance ahead of the release of awaited accounts
- a take- over bid or
- the resignation/appointment of a key member of staff.
Who Is An Insider? | Kangs Solicitors
A person is an insider if they hold information as director, employee or shareholder of the company issuing the security or has access to the information via their employment, profession or office.
Defences | Kangs Criminal Defence Preparation Team
Section 53 of the Act provides that a person is not guilty of the offence if he:
- did not expect, at that time, that the dealing would result in a profit that could be attributed to the information affecting the price of the security.
- had reasonable grounds to believe that there had been sufficient disclosure of the information with the result that no one would be prejudiced by not having it.
- would have acted in exactly the same manner without the information.
- did not expect any person to deal in securities to which the information related.
- did not expect that a profit would be made attributable to the fact that the information would affect the price of the security to which it related.
Penalties | Kangs Criminal Trial Solicitors
Section 61 of the Act provides that the offence, usually prosecuted by the Financial Conduct Authority, can only be prosecuted with the consent of Secretary of State or the Director of Public Prosecutions.
The penalties are:
- On summary conviction a fine not exceeding the statutory maximum and or a term of imprisonment not exceeding twelve months.
- On conviction on indictment, to a fine and or a term of imprisonment not exceeding seven years.
How Can We Help? | Kangs Financial Fraud team
Our team is led by Hamraj Kang who recognised as a leader in this field and is ranked as a ‘star individual’ in the legal directory Chambers & Partners.
If you need help in relation to any FCA investigation or prosecution, please do not hesitate to contact our team through any of the following: