Q

Explain what will be the likely outcome against Bill? Addresses the relevant sections of the Corporations Act

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Question - Bill Johnson is a financial analyst working for a futures investment company. Bill's job involves researching and profiling companies to determine if these companies are ideal to invest in on behalf of their clients. Explain what will be the likely outcome against Bill? Your answer addresses the relevant section/s of the Corporations Act (Cth) 2001.

ANSWER:

The given case is a classic example of insider map trading where Bill is involved in the act of insider trading as he has disclosed company insider information to Violet who in turn has disclose the same to two other friends.

As per section 1013, a liability for insider trading occurs when a person, called the insider, holds information which is not available commonly. If such information was available generally, a reasonable person would suppose a material effect on the price of a security. A person is liable under the particular section when he knows that such information has a material effect on the price and value of the securities and contravenes the law by providing such information to third parties.

As per subsection two of section 1013, if the insider subscribe for such financial securities or procured another person to subscribe for such the qualities, the body corporate which issued the securities may take action against the insider under section 1005. The body corporate who has issued such securities, is allowed to recover the loss suffered by it. Such recovery is limited to the amount of loss, or by the value at which the securities were bought or agreed to be acquired by the insider or another person from the broker less than the price at which such purchase would have been lately been made if the information was generally available. Bill shall therefore be charged by the ASIC under the above sections.


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