Insider trading is criminal conduct where information that is not generally available, which is likely to have an effect on the value of a financial product, is used to trade a financial product, or communicate inside information to others who will, or are likely to, trade on the inside information.
The insider trading provisions are found in Part 7.10, Division 3 of the Corporations Act 2001 (“the Corporations Act“). Contravention of these provisions can result in both criminal and civil penalties.
Criminal prosecutions are headed by the Commonwealth Director of Public Prosecutions (“CDPP“). However, civil action can also be taken by ASIC and other private litigants. Therefore, a person or company who is alleged to have breached the insider trading provisions will often need to defend multiple court proceedings in both the criminal and civil jurisdictions. This requires an immediate and decisive civil and criminal defence.
At Quinn & Scattini, we have an expert Commercial Litigation Team as well as a Criminal Team, which work collaboratively on these matters. Decisions must not be made alone and without proper consideration to the multiple actions, as there is invariably a flow-on effect to subsequent and concurrent proceedings.
When dealing with these cases, the relevant authorities have often conducted lengthy and complex investigations. Therefore, it is necessary that your legal team have a detailed understanding of the financial markets and the realities of what is involved with the day to day comings and goings of those involved in the industry.
The Australian Financial Markets Association (“AFMA“) has released its best practice guidelines for “Handling Confidential & Price-Sensitive Information & Soundings”. It is important that those involved with the financial markets industry, such as officers and senior employees of public companies, bankers, stockbrokers, and others who advise and have dealings in the industry, familiarise themselves with this guideline. It provides helpful insight and steps that should be taken to assist in protection from the risks of insider trading.
We have the expertise if you find yourself or your business is in need of:
- Dealing with and responding to an investigation by the regulator, or
- Defending a prosecution by the CDPP, civil action by ASIC and other potential plaintiffs.