Insider Dealing: Law and Practice

Insider Dealing: Law and Practice

by Sarah Clarke

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Product Details

ISBN-13: 9780199672950
Publisher: Oxford University Press
Publication date: 12/01/2013
Pages: 368
Product dimensions: 6.70(w) x 9.80(h) x 1.00(d)

About the Author

Sarah Clarke, Barrister, Serjeants' Inn Chambers

Sarah Clarke is a barrister at Serjeant's Inn Chambers. She was previously a Technical Specialist and In-House Counsel in the Financial Services Authority's Enforcement Division, where she led teams and advised on investigations, evidence, powers and regulatory law and procedure.

Table of Contents

Table of Cases xix

Table of Legislation xxv

List of Abbreviations xxxi

1 Introduction to Insider Dealing

1 Introduction 1.01

2 What is insider dealing in practical terms? 1.02

3 The value of information in determining pricing 1.15

4 The prevalence of insider dealing in the UK today 1.22

2 Trading on the Financial Markets-Essential Principles for Insider Dealing Cases

1 Introduction 2.01

2 Shares 2.02

3 UK stock exchanges 2.11

4 Availability of information and stock market pricing 2.16

5 The price of shares 2.23

6 Investors 2.26

7 Contracts for difference 2.33

8 Spread bets 2.47

3 A History of Insider Dealing Legislation in the UK

1 Introduction 3.01

2 Relevant developments in the US 3.02

3 Economic theory 3.03

4 The UK's response to insider dealing 3.12

4 The European Insider Dealing Directive

1 Introduction 4.01

2 The Relationship between the Insider Dealing Directive and Part V of the CJA 4.02

3 The background to the Insider Dealing Directive 4.04

4 The Proposal 4.08

5 The Insider Dealing Directive-Recitals 4.25

5 Part V of the Criminal Justice Act 1993: The Criminal Offences (s 52 CJA)

1 Introduction 5.01

2 Part V of the CJA-an overview 5.02

3 The offence 5.07

4 Insider dealing (s 52(1) CJA) (the 'primary' offence) 5.16

5 The secondary offences 5.21

6 Inside Information (s 56 CJA)

1 Introduction 6.01

2 The statutory definition of inside information 6.02

3 Identifying the inside information 6.03

4 Relating to particular securities or issuers (s 56(1)(a) CJA) 6.10

5 Specific or precise (s 56(1)(b) CJA) 6.22

6 Information which has not been 'made public'(s 56(l)(c) CJA) 6.64

7 The evidential practicalities of proving that information has not been 'made public' 6.95

8 Likely to have a 'significant effect' on price (s 56(1)(d) CJA) 6.111

9 Price-affected securities 6.129

7 Insiders (s 57 CJA)

1 Introduction 7.01

2 Meaning of 'insider' 7.02

3 The elements of knowledge 7.03

4 Inside information at the time of dealing 7.10

5 An inside source 7.16

6 Categories of insider 7.19

8 Securities and Regulated Markets

1 Introduction 8.01

2 The correct analysis 8.02

3 Securities 8.03

4 Regulated markets 8.29

5 Securities other than shares 8.37

9 Dealing

1 Introduction 9.01

2 Dealing (s 52(3) CJA) 9.02

3 Acquisitions and disposals (s 55(1)-(3) CJA) 9.06

4 Procuring an acquisition or disposal (s 55(4) CJA) 9.11

5 Professional intermediaries 9.20

10 Territorial Scope (s 62 CJA)

1 Introduction 10.01

2 Primary insider dealing offence (s 62(1) CJA) 10.02

3 Secondary 'Encouraging' and 'Disclosing' offences (s 62(2) CJA) 10.05

4 The scope of s 62 CJA 10.06

11 Statutory Defences

1 Introduction 11.01

2 Statutory defences to the primary insider dealing offence (s 53(1) CJA) 11.02

3 Statutory defences to the secondary 'Encouraging' offence (s 53(2) CJA) 11.17

4 Statutory defences to the secondary 'Disclosing' offence (s 53(3) CJA) 11.19

5 Special defences 11.23

6 Statutory defences-legal and evidential burden on the defence 11.42

12 Prosecution of Insider Dealing Offences

1 Introduction 12.01

2 Prosecuting bodies 12.02

3 Consent for prosecution 12.05

4 Prosecution of other offences connected to insider dealing 12.09

5 Conspiracy or substantive counts 12.13

6 Summary proceedings: venue and time limit 12.21

13 Penalties and Sentencing

1 Introduction 13.01

2 The penalty for offences of insider dealing (s 61 CJA) 13.02

3 Court of Appeal sentencing authorities 13.04

4 Sentences imposed in recent insider dealing cases 13.16

5 Disqualification of company directors 13.17

6 Confiscation issues in insider dealing cases 13.19

7 Other FCA proceedings 13.28

14 Insider Dealing-The Civil Market Abuse Regime

1 Introduction 14.01

2 Legislative background 14.02

3 Legal and source materials 14.12

15 The Civil Offences

1 Introduction 15.01

2 Part VIII of FSMA 15.02

3 Qualifying investments and prescribed markets 15.13

4 Territorial scope 15.32

16 Section 118(2) FSMA; Behaviour-Insider Dealing

1 Introduction 16.01

2 Section 118(2) FSMA 16.02

3 Insider 16.05

4 Dealing or attempting to deal 16.14

5 'On the basis of' 16.16

6 Inside information 16.28

7 Section 118(2) FSMA behaviour-safe harbours 16.66

17 Section 118(3) FSMA; Behaviour-Improper Disclosure

1 Introduction 17.01

2 Section 118(3) FSMA behaviour 17.02

3 Section 118(3) FSMA behaviour-safe harbours 17.10

18 Section 118(4) FSMA; Behaviour-Misuse of Information

1 Introduction 18.01

2 Section 118(4) FSMA behaviour 18.02

3 The regular user 18.17

4 'Generally available' 18.18

5 'Based on' 18.19

6 'Relevant information' 18.20

7 Standards of behaviour 18.22

8 Section 118(4) FSMA-safe harbours 18.23

19 Market Abuse-Statutory Defence and Power to Impose Penalties

1 Introduction 19.01

2 Statutory defence (s 118A(5) FSMA) 19.02

3 Power to impose penalties in cases of market abuse (s 123 FSMA) 19.06

4 Penalties imposed in market abuse cases 19.28

20 Market Abuse Proceedings-Article 6 ECHR and the Burden and Standard of Proof

1 Introduction 20.01

2 Status of market abuse proceedings under Article 6 ECHR 20.02

3 Burden and standard of proof in market abuse proceedings 20.12

21 Detection and Referral to Enforcement

1 Introduction 21.01

2 The FSA 21.02

3 The FSA-attitude to enforcement 21.07

4 Insider dealing prosecutions-the statistics 21.08

5 The PRA and the FCA 21.10

6 Detection of insider dealing and market abuse 21.20

7 The Enforcement and Financial Crime Division 21.34

8 The process by which cases are referred to Enforcement for investigation 21.36

9 Cases in which other authorities have an interest 21.38

22 The Enforcement Investigation

1 Introduction 22.01

2 Allocation to a case team 22.02

3 Powers of investigation 22.03

4 Notification of an investigation 22.06

5 Use of statutory powers to require the production of documents, the provision of information, or the answering of questions 22.09

6 Powers under the Regulation of Investigatory Powers Act 2000 22.17

7 Protected items (s 413 FSMA) 22.18

8 Banking confidentiality (s 175(5) FSMA) 22.20

9 Sanctions for failure to comply (s 177 FSMA) 22.21

10 Use of information 22.25

11 Search warrants 22.34

12 Interviews 22.40

13 Witness statements 22.51

23 Criminal Proceedings

1 Introduction 23.01

2 The decision to commence criminal proceedings 23.02

3 Factors which may influence the decision 23.05

4 Co-operation agreements 23.15

5 Plea discussions 23.29

6 The role of the RDC Chairman 23.31

7 Instituting criminal proceedings 23.35

8 Restraint proceedings 23.38

9 Issuing a caution 23.39

10 Decisions not to prosecute 23.41

24 The Enforcement Process-Market Abuse Proceedings

1 Introduction 24.01

2 Range of enforcement actions 24.02

3 Informal enforcement action 24.03

4 Formal enforcement action 24.09

5 The enforcement process 24.21

6 The Executive Settlement Process 24.45

7 Civil proceedings 24.57

8 Publicity 24.59

25 The Future

1 Introduction 25.01

2 New European legislation 25.02

3 The Draft Regulation 25.06

4 The Draft Directive 25.24

5 Conclusion-the next five years 25.28

Appendices

Appendix 1 Glossary of Terms Commonly Encountered in Insider Dealing Cases 291

Appendix 2 Legislation

A Insider Dealing Directive (Dir 89/592/EC) 296

B Criminal Justice Act 1993, Part V 301

C Criminal Justice Act 1993, Schedule 2 306

D Insider Dealing (Securities and Regulated Markets) Order 1994 (SI no 187) (as amended) 308

Appendix 3 Financial Services and Markets Act 2000, Part VIII (as amended) 312

Appendix 4 FSMA 2000 (Prescribed Markets and Qualifying Investments) Order 2001 322

Index 325

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