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Greetings Tutor, i hope you are doing well .
I was going through the topic of General defences for Insider Trading/Dealing
a) An individual has a defence regarding dealing and encouraging others to deal if they prove that:
– They did not expect there to be a profit or avoidance of loss.b) Defences to disclosure of information by an individual are that:
– They did not expect any person to deal.Both the defence seems to be same. But I’m unable to understand what they actually mean. Can you please help me out.
Hi Vikas
If I pass on insider information to my parents about the company that I am auditing, telling them that the company is doing unbelievably well, that would be potentially a breach of the insider dealing provisions. But I know that my parents have never ever bought shares in any company so I firmly believe that I genuinely could not expect them to buy shares on this occasion.
If, again, I pass on inside knowledge that the same company is pretty stagnant in terms of growth and progress, I firmly believe that there is unlikely to be any significant movement in the share price. How could I have possibly have predicted the dramatic rise in market price following the announcement of the company results?
I the first case, I didn’t expect them to deal. In the second case I didn’t expect a profit (nor loss) to result.
OK?
Thankyou Tutor 🙂
Apologies for not replying promptly because of the internet restrictions in my area.
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