15 - Market Abuse

• The three offenses under Part V of the Criminal Justice Act 1993 are:

  ·        Dealing in price-sensitive securities on the basis of insider information;

  ·        Encouraging another person to deal in price-sensitive securities on the basis of insider information; and

  ·        Disclosing inside information.
• Insider information is information which:

  1.        Relates to particular securities or a particular issuer of securities

  2.        Is specific or precise

  3.        Has not been made public

  4.        If it were to be made public would be likely to have significant effect on the price of securities
• Section 57(1) provides that a person has information from an inside source if and only if:

  (1) they have it through (i) being a director, employee or shareholder of an issuer of securities; or (ii) having access to the information by virtue of their employment, office or profession; or

  (2) the direct or indirect source of the information is a person within (1).
• A person will not be guilty of the dealing offence if they can show:

  1. that they did not at the time expect the dealing to result in a profit attributable to the fact that the information in question was price-sensitive information;

  2. that at the time they believed that the information had been disclosed widely enough; or

  3. that they would have done what they did even if they had not had the information.
• A market maker is a person who holds themself out at all normal times in compliance with the rules of a regulated market or an approved organisation as willing to acquire or dispose of securities, and is recognised as doing so under those rules.
• The ‘Special Defence’ in schedule 1 of CJA 1993 provides that individuals will not be guilty of the dealing offence or the encouraging offence if they can show that they acted in good faith in the course of their business as a market maker or their employment in the business of a market maker.
• Insider dealing is an either-way offence and a person who is guilty of insider dealing will be liable:

  ·         On a summary conviction, to a fine and/or imprisonment for a term not exceeding six months; or

  ·         On a conviction on indictment, to a fine and/or imprisonment for a term not exceeding ten years.
• The three offences under Part 7 of the Financial Services Act 2012 are:

  ·         Misleading Statements

  ·         Misleading Omissions

  ·         Misleading Statements etc in relation to benchmarks
• Market abuse rules in the UK MAR impose civil liability only
• The responsibility for imposing MAR is placed upon the FCA