CMFAS RES 1A Market Conduct question: director never trades himself

CMFAS RES 1AMarket Conduct

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:

A dealing by any family member of his, whether or not he actually tips them
B nothing, since he made no personal profit from the trade
C insider dealing only where the brother is also a director
D procuring another to deal and communicating (tipping) the information

Show the answer and explanation

Answer: D. procuring another to deal and communicating (tipping) the information

The insider prohibition covers three acts: dealing, procuring another to deal, and communicating the information to someone likely to deal. Tipping the brother to buy is caught even if the director never trades.

Common mistake

Personal profit is not required — procuring or tipping is itself an offence.

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Related CMFAS RES 1A questions

Mr Tan, assistant to the CEO of an SGX-listed company, used trading accounts belonging to Mr Yap to buy the company's shares ahead of a takeover announcement and later to sell ahead of the withdrawal of the offer. Which of the following consequences followed?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?For the SFA s.202 offence, what must be shown in addition to the dissemination of information about the price effect of an illegal transaction?

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