Prosecution of insider trading does not require proof inside knowledge prompted trading. It is enough to prove trading took place whilst having inside information about a listed company, the High Court ruled.
Hamish Mark Sansom is alleged to have breached the Financial Markets Conduct Act by selling 15,000 shares in ERoad Ltd after being sent a confidential internal ERoad management report highlighting poor performance by the company’s US operations. It is a criminal offence to trade on inside information. Mr Sansom says his sale was not motivated by the internal report; he was intending to sell anyway.
At a preliminary hearing prior to his trial, The High Court was asked to rule on a technical legal point: is an insider’s motivation for trading relevant. Justice Hinton ruled an insider commits a criminal offence by trading at any time having material information not generally available to the market. Motivation for trading is irrelevant. This is based on the ‘market fairness rationale’ she said. It is directed at preventing insiders having an information advantage not derived from research or analysis of publicly available information. Requiring the prosecution to prove an insider’s motivation for trading would seriously undermine enforcement, she added.
R. v. Sansom – High Court (19.03.18)
18.058