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

Raj, a senior manager at Orion plc, knows that Orion will shortly report profits far below market expectations. He telephones his brother and urges him to sell his Orion shares at once, without telling him why. The brother sells and avoids a loss. What is Raj's position?

Raj may be guilty of insider dealing because he encouraged another person to deal while holding inside information. The offence covers encouraging others to deal, so it does not matter that he did not trade himself, did not reveal the details, or received no payment.

  1. ARaj commits no offence because he did not deal himself
  2. BRaj commits no offence because he did not disclose the information itself
  3. CRaj may be guilty of insider dealing by encouraging another person to deal on the basis of inside informationCorrect
  4. DRaj is guilty only if he received a payment from his brother

Explanation

Insider dealing covers encouraging another person to deal in securities where the encourager knows or has reasonable cause to believe the dealing will take place on the basis of inside information. Raj need not deal, reveal details, or profit personally. The 'no disclosure' option fails because encouragement is itself an offence.

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