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

Hasan, a director of Vega plc, sells shares in Vega shortly before the company publishes a profit warning that he knew about. Which of the following is the most likely consequence if he is convicted of insider dealing?

Hasan faces possible imprisonment, a fine, or both, because insider dealing is a criminal offence. Regulators may add civil penalties as well. The sale itself is not usually void automatically, so the main consequence is criminal and regulatory sanction rather than a purely civil outcome.

  1. AHe may face imprisonment or a fine, as insider dealing is a criminal offenceCorrect
  2. BHe faces civil liability only and cannot be imprisoned
  3. CHis sale is automatically void and the buyer keeps the shares at no cost
  4. DHe is only disqualified from holding any shares

Explanation

Insider dealing is a criminal offence in most jurisdictions, punishable by imprisonment, a fine, or both, and regulators may also impose civil penalties. The transaction is not generally void automatically, since the market counterparty's contract usually stands. Civil-only and share-ban outcomes understate the criminal exposure.

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