CMFAS RES 1A Market Conduct question: connected to a corporation for the purposes of SFA s.218

CMFAS RES 1AMarket Conduct

Which of the following are connected to a corporation for the purposes of SFA s.218? (a) A director of a related corporation. (b) A substantial shareholder of the corporation. (c) A lawyer whose firm is advising the corporation on an acquisition. (d) A retail investor who overhears a conversation in a lift.

A (a), (b), (c) and (d)
B (a), (b) and (c)
C (a) and (b)
D (b) and (c)

Show the answer and explanation

Answer: B. (a), (b) and (c)

Section 218(5) connects officers of the corporation or a related corporation, substantial shareholders in either, and persons whose position gives access to price-sensitive information by virtue of a professional or business relationship with the corporation, or by being an officer of a substantial shareholder. The eavesdropper is not connected; he may still be caught under s.219 if he knows the information's character.

Common mistake

Professional advisers are connected persons; strangers fall under s.219, not s.218.

Practise more RES 1A Market Conduct questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: Market Conduct CMFAS RES 1Apractice questions & mock exams

Related CMFAS RES 1A questions

Under the civil penalty regime Mr Iskandar is a remisier with no connection to Pico Ltd. At a wedding a stranger tells him that Pico will announce a large contract loss the following week. He believes it, sells his Pico shares, and tells his brother-in-law, who also sells. The announcement is made and the price falls 22 per cent. What must be established for liability under SFA s.219?A director in possession of unannounced good results tells his brother to buy the company's shares. Even if the director never trades himself, he may be liable because the prohibition also covers

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practising →

Original study material mapped to the public CMFAS RES 1A syllabus. Unofficial, not endorsed by MAS or IBF. Verify figures and rules against current guidance before relying on them.