MARKET ABUSE

I’m not aware of the FCA’s specific elements within their code but I can see that proof of intent could be a requirement. If you’re passionately interested to find out ( the chance of this appearing as even a 1 mark question in an ACCA exam are pretty remote!) then you could look up the code on the internet

However, I am aware that a valid defence against a charge of insider dealing has always been ‘I sold the shares for reasons other than the avoidance of suffering a loss on my investment’

I used to give as an example in lectures the hypothetical example of an insider investor who, knowing that bad news was imminently going to hit the market value of the affected shares, sold a substantial part of the investment. When challenged, the defence was that the sale was made for reasons other than for the avoidance of suffering a loss.

“Oh yes” says the FCA. “So what were the reasons?”

“I needed the money to buy a weekend cottage in rural England and have the cash readily available in case we found a place that we liked and could immediately buy”

“And did you buy the cottage?”

“No, my partner and I made enquiries and were unable to find a place that suited our aspirations but we are still actively looking”

“Oh, all right then” says the FCA

And another corrupt insider gets away by showing a lack of intent

OK?

You’re welcome, Safiya, and I appreciate your thanks. But …