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CMFASPrepStudyingRES5
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Financial advisory
RES5Financial Advisory Services✓Company A's CEO tells his golf partner (an outsider) about an unannounced acquisition. The partner tells his own broker, who understands it is confidential and price-sensitive and buys. Who can potentially be liable?
The CEO may be liable for communicating/procuring, the partner for onward communicating/procuring, and the broker as an information-connected person who dealt while knowing the information was non-public and price-sensitive. Each link is assessed against the relevant test.
The CEO not trading is irrelevant — communicating (tipping) is itself prohibited, and liability can run down the tipping chain to those who actually know the information's character.
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