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

Marco, a company director, uses his knowledge of an unannounced takeover bid, which is not public, to buy shares in the target company before the announcement and sells them at a profit afterwards. What is this conduct?

This is insider dealing. Marco traded in securities using price-sensitive information that was not public and which he obtained as a director. It is a criminal offence in many jurisdictions. It is not fraudulent trading, which concerns defrauding creditors through a company's business.

  1. AInsider dealing, which is a criminal offence in many jurisdictionsCorrect
  2. BMoney laundering, because profits were obtained and moved
  3. CFraudulent trading, because the target company was trading

Explanation

Insider dealing is dealing in securities using price-sensitive, non-public information obtained through a position. Marco's trades match this. Money laundering concerns concealing the proceeds of crime, and fraudulent trading concerns carrying on a company's business to defraud creditors.

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