The Criminal Justice Act 1993 sets out the basic law relating to insider trading.
There are three potential offences:

• Insider dealing. When a party who is able to access information relating to the company concerned deals in securities whilst in possession of such information, which must be unpublished and likely to affect the price of the securities concerned.
• Encouraging others to deal. Committed where someone encourages another to deal in securities whose price is likely to be affected by inside information in their possession. The insider will be committing an offence even if the person being encouraged does not know the facts. A transaction need not actually take place. It is sufficient that encouragement takes place.
• Disclosure. Disclosing inside information outside the proper performance of the person’s duties. For a conviction to succeed it is not necessary for there to be evidence that the party making the disclosure intended it to be acted upon.

Although there have been very few criminal prosecutions for insider trading, organisations are nonetheless at risk of inadvertently trading on price sensitive information as well as breaching FSA rules designed to help ensure the risk of insider trading is minimised.  Key FSA obligations are:

• SYSC 3.2.1R to have in place adequate arrangements to manage the risk of financial crime that the organisation is exposed to,
• COB - relating to the management of sensitive information and the use of Chinese Walls
• PA trading rules

How we can help
 
Momenta can support you in the development and operation of your insider trading arrangements in a number of ways including:

• Provide induction, ongoing or remedial training and coaching to your staff on the latest insider trading rules and how they impact on doing business,
• Review your current insider trading systems and controls and advise on how they might be strengthened,
• Review your existing arrangements for insider trading surveillance and monitoring.