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ACCA Applied Skills · Corporate and Business Law (Global) · Fraudulent and criminal behaviour

Amara is a finance director of Zeta plc, a listed company. She learns in a confidential board meeting that Zeta is about to announce a takeover bid for a rival, which will almost certainly raise the rival's share price. She buys shares in the rival the same day, before any announcement. Which of the following best describes her position?

Amara is likely guilty of insider dealing. She holds specific, unpublished, price-sensitive information obtained through her directorship and used it to buy securities before announcement. The offence is not limited to her own company's shares, and it does not require her to pass the information to anyone else.

  1. AShe is not guilty of insider dealing because she bought shares in a different company from her own employer
  2. BShe is likely guilty of insider dealing because she dealt on the basis of unpublished price-sensitive information obtained through her positionCorrect
  3. CShe is not guilty of insider dealing unless she passed the information to another person

Explanation

Insider dealing covers dealing in securities while in possession of inside information, meaning specific, non-public, price-sensitive information. It is not limited to shares in the insider's own company; the bid information affects the rival's shares. Option A is wrong for that reason, and option C is wrong because dealing by herself is already an offence without any tipping.

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