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328 SID AND VIC (A)
Sid is a director of two listed public companies in which he has substantial shareholdings:
Trend Plc and Umber Plc.
The annual reports of Trend Plc and Umber Plc have just been drawn up although not yet
disclosed. They show that Trend Plc has made a surprisingly big loss and that Umber Plc has
made an equally surprising big profit. On the basis of this information Sid sold his shares in
Trend Plc and bought shares in Umber Plc. He also advised his brother, Vic, to buy shares in
Umber Plc.Task 3 (2 marks)
Which of the following TWO statements are correct?
? Vic has not committed an offence as he did not receive any specific information from
Sid which encouraged him to buy the shares in Umber plc
? Vic has committed an offence as he has an indirect interest in Umber plc
? There are no defences to insider dealing
? It is a defence if it can be shown that there was no expectation of profit from the
dealingANS-
Task 3
? Vic has not committed an offence as he did not receive any specific information from
Sid which encouraged him to buy the shares in Umber plc
? It is a defence if it can be shown that there was no expectation of profit from the
dealing.Good day sir,I don’t understand how Vic hasn’t also committed as offence since he received information from Sid who is an insider to buy shares in Umber plc. I’ll appreciate if you can explain better.
I have every sympathy with you here. Vic did not receive SPECIFIC INFORMATION to buy shares in Umber
Hmmm!
Maybe (and I’m struggling here!) the offence would have been where Sid said “Vic, buy shares in Umber because they’ve had an unexpected good year and the share price should increase as a result2
Now, in THAT scenario, Vic would surely have been found guilty
But that’s not what happened. Over a pint, one evening, Sid says to his brother “How’s Cheryl and the kids? Have you still got that daft dog? Oh, by the way, I suggest that you might buy some shares in Umber Plc. Has that cat of yours had its kittens yet? Will you have another drink? It’s your round”
No specific information there – so no guilt piled on Vic!
Hmmmm
OK?????
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