1.1 Penalties for insider dealing
As of the CJA 1993, insider dealing is a criminal offence. There are two types of penalties: an unlimited fine and a maximum of seven years’ imprisonment (before 1 November 2021). This has increased to ten years for offences committed on or after 1 November 2021. If individuals are found guilty of insider dealing, the court can impose one or both penalties.
Box 3 Insider dealing: an example
The investment bank UBS AG recruited Fabiana Abdel-Malek to be its senior compliance officer in its London office. During her employment, she was able to gain inside information and disclosed the information to her family friend, Walid Choucair, a very experienced day trader of financial securities. Choucair was able to make a profit of approximately £1.4 million with the information he gained from Abdel-Malek.
In 2019, a jury at Southwark Crown Court decided that Abdel-Malek and Choucair were both guilty of insider dealing under section 52 of the CJA 1993 and the judge sentenced each of them to three years’ imprisonment (Financial Conduct Authority, 2019).
The purpose of the following activity is to help you understand insider trading and the relevant legislation using a multiple-choice question format.
Activity 1 Insider dealing
Answer the following questions by selecting the best option:
- Which statute contains the legislation on insider dealing?
Answer
The Criminal Justice Act 1993 contains legislation on insider dealing.
- Which of the following behaviours is considered to be insider dealing?
Answer
All are examples of insider dealing.
- Which of the following is not a general defence to a charge of insider dealing?
Answer
According to section 53 of the CJA 1993, expecting other people to benefit from the dealing in shares/securities is not a general defence to insider dealing.
- Which of the following statements is false?
Answer
Insider dealing has been made a criminal offence under section 52 of the CJA 1993.
OpenLearn - Corporate fraud and criminal behaviour
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