Skip to content

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

Marta is a finance director of Lumen plc, a listed company. During a board meeting she learns that Lumen is about to announce a takeover bid that will push its share price up sharply. Before the announcement she buys shares in Lumen through her broker. Which description best fits her conduct?

Marta commits insider dealing. As a director she holds unpublished, specific, price-sensitive information about the takeover bid, and she bought the company's shares before it became public. Dealing on such information is the offence, so whether she told anyone else does not matter.

  1. AInsider dealing, because she dealt in securities using unpublished price-sensitive information obtained as an insiderCorrect
  2. BNot insider dealing, because directors are always entitled to deal in their own company's shares
  3. CNot insider dealing, because she did not pass the information to anyone else
  4. DMarket manipulation, because she created a false impression of demand for the shares

Explanation

Marta is an insider through her position as director. She has inside information, which is specific, not public and price-sensitive, and she dealt on it. Her not tipping anyone off is irrelevant, since dealing alone is an offence.

Did you get it right without looking?

One question tells you little. A timed set on Fraudulent and criminal behaviour shows your real accuracy, how long you take and where you lose marks.

Practise Fraudulent and criminal behaviourFree diagnostic mock

More Fraudulent and criminal behaviour questions