Insider Dealing and Market Abuse Defence
If you or the company you work for are facing allegations of insider trading and market manipulation, a robust defence is vital from the outset as the consequences are potentially severe. You could face a lengthy prison sentence or an unlimited fine.
Insider dealing ordinarily relates to allegations of trading while in possession of inside information, encouraging others to deal in such circumstances (‘tipping off’) and disclosure of inside information to unauthorised individuals. The person who discloses the confidential information may do so to a friend, family member or colleague without realising that they may trade as a result of the information disclosed.
At JMW, we draw on decades of legal experience, as well as the knowledge of relevant experts to create strong defences that get you the results you need. We are also ranked as a top firm in the UK Chambers and Legal 500, so you can be confident that our business crime solicitors can assist with the most complex cases.
How JMW Can Help
We have the experience and specialist skills to help you build a defence to put you in the best position to refute any allegations of insider dealing and market abuse. This area of the law is highly complex; our solicitors have a deep understanding of this area and we will use our expertise to ensure the best outcome.
The JMW team is highly successful in representing both individuals and businesses defending allegations of insider dealing and market abuse. We work with various experts, from accountants to forensic computer experts, to provide the most thorough, efficient service possible that is tailored to you and your business-specific situation and requirements.
We have experience in dealing with investigations by the Financial Conduct Authority (FCA), the Department of Trade and Industry(DTA), the Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS), and our knowledgeable solicitors are best placed to create a strong defence if you, or the firm you work for, have been accused of insider dealing. We are able to represent companies and individuals from anywhere in the UK and routinely represent those facing multi-jurisdictional investigations.
Insider Dealing and Market Abuse Cases We Deal With
There are several pieces of legislation that deal with insider trading and the abuse of the stock market, including The Financial Services and Markets Act 2000, the European Union's Market Abuse Directive and the Criminal Justice Act 1993. An allegation of insider dealing may be dealt with as a regulatory breach and may also be dealt with as a potential criminal offence. Both scenarios require expert legal advice and representation.
There are seven acts that are seen as forms of market abuse and we are able to offer expert legal support on any cases involving these.They are:
- Insider dealing - When an insider deals or attempts to deal based on their inside knowledge
- Improper disclosure - When an insider passes on information, either verbally or in writing, to an unauthorised person, allowing them to benefit from dealing
- Misuse of information - Behaviour based on information that is not readily available and would impact investment decisions and about whether or not to invest or trade
- Transaction manipulation - Trading or placing orders that give a false impression of either the supply or demand of certain investments, leading to artificial price rises
- Manipulating devices - Trading or placing trading orders using 'fictitious devices' or any other kind of deception
- Dissemination - Giving out information that gives a misleading impression about an investment or an investor. The person giving the information must be aware that it is false
- Distortion or misleading behaviour - Giving a false impression of either the supply of, or demand for, an investment, leading to market distortion
FAQs About Inside Dealing and Market Abuse
What are insider dealing and market abuse?
Insider dealing and market abuse are among the most serious business crimes that a company or an individual can be charged with. They relate to the manipulation of markets for the gain of a person or a firm, and those convicted of insider dealing can face lengthy prison sentences, fines and irreversible damage to their professional reputation.
Who is classed as an insider?
The legal definition of an ‘insider’ is any person who is a director of a company, a company officer - for instance, the Chief Financial Officer - or those who own a sizeable share in the firm and would benefit from its success. An insider could also be someone who has access to financial information through their employment, or who has gained access to confidential information through criminal behaviour.
If someone is given a 'tip off' by a friend who has insider knowledge of a transaction or deal and they are aware the information they are being given is inside data, they also become an insider in a legal sense.
What is classed as inside information?
Information that relates to particular securities, is specific or precise and has not been made public, and if it were to be made public would be likely to have a significant effect on the price of any securities, is deemed to be ‘inside information’. This could include information that affects the assets and liabilities of a company, the performance of a business or the financial condition of a company. For example, a listed company’s contract wins before they are announced to the marker would be classed as inside information.
How can I defend allegations of insider dealing and market abuse?
If you face allegations of insider dealing or market abuse, we will explore potential defences that may include the fact that you were not expecting the information to generate profit, that you were under the impression that the information was widely known, or if it can be evidenced that you would have acted in the same way without access to the private information.
The available statutory defences are complex and specialist legal advice is essential.
What sentence could be imposed for insider dealing and market abuse?
If your business has been accused of insider dealing or market manipulation, under section 52 of the Criminal Justice Act 1993, you could face a custodial sentence of up to seven years and a substantial fine could be imposed by the Financial Services Authority - there are currently no limits on the amount that those found guilty of insider trading can be fined.