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Market Abuse and Insider Trading

If you have been accused of market abuse and/or insider trading, this is a very serious matter.

Being charged with any crime can be a frightening and stressful experience, causing a severe impact on you and your family, and this does not change because the offence is considered a ‘white collar' one. As well as the potential criminal implications, even unfounded allegations of this sort can affect your livelihood and harm your reputation. Read on to find out what these terms mean and how we can help.

What is market abuse?

Market abuse is any behaviour prohibited by the Market Abuse Regulation 2016. This includes insider dealing, market manipulation or attempted market manipulation and unlawful disclosure. Insider dealing and unlawful disclosure both involve misuse of insider information, whilst market manipulation involves dishonestly or artificially manipulating the market, for instance, by making misleading statements about the value of a security.

What are the penalties? 

Market abuse is a civil offence, and the penalties can include an injunction, an unlimited fine, and/or being banned from carrying out any regulated activities in the future. Two types of market abuse, insider dealing and market manipulation, also carry criminal penalties such as an unlimited fine and a prison sentence of up to seven years. In either case, the impact on you personally and your firm in general of being found to have committed such an offence cannot be overstated, so get in touch today to find out more about your options and what penalties would be likely in your case.

What is insider trading?

Insider trading is a type of market abuse. Simply put, it involves using inside information to gain or give an unfair advantage on the securities market. Under UK law, you can commit the criminal offence of insider dealing by:

  • Dealing in securities when you have inside information which may affect their price.
  • Encouraging someone else to deal in securities when you have information which may affect their price.
  • Disclosing inside information other than properly as part of your employment.

What counts as inside information? 

Inside information is information which meets four requirements:

  1. It relates to particular securities or issuers thereof.
  2. It is sufficiently precise or specific.
  3. It isn’t in the public sphere.
  4. If it were in the public sphere, it would impact the price of the securities it relates to.

Are there any situations in which disclosing inside information isn’t insider dealing? 

If you are disclosing information like this because you are legally required to do so, or are disclosing it to an authority such as the Financial Conduct Authority, it will not be classed as insider dealing. It also isn’t insider dealing to disclose inside information to your legal representative if you need them to know it in order to defend you properly.

Are there any defences? 

If you can prove that your case falls into one of the situations outlined as a ‘defence’ to insider dealing, you will not be found guilty of the criminal offence. If you are accused of dealing in securities or encouraging someone else to deal in securities based on inside information, the possible defences include:

  • You did not think that you or the person doing the dealing would profit as a result of you having the inside information. For instance, you may have thought that what you knew would have no impact on the price of the securities being dealt.
  • You did not realise that you were acting on inside information, for instance, because you thought this information was already in the public sphere.
  • You or the person doing the dealing would have acted the same way without the inside information.
  • It was reasonable for someone in your position to act the way you did in relation to inside information.

If you are accused of disclosing inside information, defences include:

  • That you did not expect the person to whom you disclosed the information to deal in securities as a result of your disclosure.
  • If you did expect that person to deal in securities as a result of your disclosure, you did not expect that the information you gave them would impact the price of the securities in which they were dealing.

What are the penalties? 

The criminal offence of insider dealing carries a penalty of an unlimited fine and/or a prison term of up to seven years. Insider trading is also covered under the civil offence of market abuse (see above), so additional penalties such as a ban from engaging in regulated activities may also apply. It is important to note that even if you are not being charged with criminal insider dealing, or have been acquitted, you may still be subject to penalties for market abuse. This is because as a civil offence, the threshold for proving market abuse is much lower.

Contact our Market Abuse and Insider Trading lawyers in London today.

At Saunders, we understand the impact that even unfounded allegations of insider trading and market abuse can have on your business and reputation. Our team of discrete, experienced lawyers will never lose sight of that when they represent you. We offer a free initial consultation to all our clients, so call us today on 020 3733 4479 or complete our online enquiry form and find out how we can help you achieve the best outcome in your case.

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