CMFAS RES5 Securities Dealing & Market Conduct question: proof of knowledge differently for a connected

CMFAS RES5Securities Dealing & Market Conduct

How does the SFA treat proof of knowledge differently for a 'connected person' versus a 'non-connected person' in possession of inside information?

A For a connected person, knowledge is presumed until proven otherwise; for a non-connected person it must be proven
B A connected person can never rely on any statutory defence, while a non-connected person always can
C Only non-connected persons are prohibited from dealing, since connected persons are covered by SGX rules
D For both, the prosecution must prove that they intended to use the information before any offence arises

Show the answer and explanation

Answer: A. For a connected person, knowledge is presumed until proven otherwise; for a non-connected person it must be proven

For a connected person (e.g. officer, substantial shareholder, adviser) it is presumed, until proven otherwise, that they knew the information was not generally available and was price-sensitive. For a non-connected person, it must be proven that they knew this. In both cases it is irrelevant whether they intended to use the information.

Common mistake

The distinction is only about the burden of proving knowledge — both are prohibited from dealing.

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