Legal Updates

Company insider information presented at a closed professional conference will not be deemed public information

April 6, 2021

An accountant traded in the shares of a company based on information he has personally received from its CEO, and even advised the CEO on how to improve the value of the stock, in order to increase profits. The brother of the accountant also traded in the shares based on his recommendations. The data was such that was presented by the company in a closed investors meeting held in London but not announced to the market via the stock exchange.
The Court held that the accountant and his brother committed an offense of using insider information and imposed on them fines and incarceration. Insider information is any material information, which is not available to the general public, cannot be accessed independently and may confer an unfair advantage on those who trade in company shares based thereupon. The use of insider information constitutes an economic offense, with the danger of such offenses being a breach of public trust and the public interest due to the violation of equality between the 'players' in the capital markets. Here, the accountant had an intensive relationship with the CEO of the company regarding its affairs and received insider information from him, based on which he and his brother purchased shares of the company and he even recommended others to do the same. The fact that the information was presented during a closed professional conference does not render public the information, which had a significant impact on the price of the company share and may have given its holder an unfair advantage over other investors in the market. Thus, the accountant and his brother committed an offense of using insider information.