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

Priya, a director of Orla Ltd's listed parent, reads a widely published newspaper report, based on the company's official market announcement made that morning, that profits have doubled. She buys shares that afternoon. Which is the most likely legal outcome?

Priya does not commit insider dealing. Inside information must be unpublished, and the profit figures were officially announced to the market before she bought. Her status as a director does not make dealing on public information unlawful, and board approval is irrelevant to the test.

  1. AShe commits insider dealing because she is a director
  2. BShe commits insider dealing unless she obtains board approval for the purchase
  3. CShe does not commit insider dealing because the information had been made public, so it was no longer inside informationCorrect

Explanation

Inside information must be non-public. Once the information has been officially announced to the market, it is public and the price should reflect it. Being a director does not make dealing an offence by itself, and board approval is not what determines whether information is inside information.

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