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

Which of the following information is most likely to be 'inside information' for insider dealing purposes?

The confidential board decision to cut the dividend is inside information. It is specific, relates to the company, has not been made public, and would be likely to affect the share price significantly if announced. Published figures, general sector opinions and baseless rumours do not meet these requirements.

  1. AA rumour in a newspaper column that a listed company might be sold, with no basis in fact
  2. BA published annual report showing last year's profit
  3. CAn analyst's general opinion that the retail sector will weaken
  4. DA confidential decision by a listed company's board to cut its dividend sharply, not yet announcedCorrect

Explanation

Inside information must be specific or precise, not made public, relating to the issuer or its securities, and likely to have a significant effect on price if published. The unannounced dividend cut meets all these tests. The published report is already public, and the general opinion is not specific to the issuer.

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