NSW Potential Insider Trading Under Australian Law?

[draziw]

Hi there. Hoping someone can help. My wife works in Australia for a UK based Plc who is about to commit to a contract with a mid-size publicly listed US tech firm. The contract is sizeable and will be very good news for the tech firm.

The deal has been communicated internally as being market sensitive, as both firms are listed, although it's not completely confined to upper management and the company is pushing ahead with various integration projects ahead of the deal being signed.

A senior member of the management team in Australia has openly claimed several times to various people in my wife's office to have bought shares in the tech firm following the internal announcement of the deal, even stating their motives for doing so as being directly related to the contract being signed.

Is this legal under Australian law and does my wife (and her colleagues) need to declare that these claims have been made to her? She's not sure where she stands if this is indeed illegal (insider trading?) and she is later discovered to have had knowledge of her manager's purchase of shares.

Thanks for your time and any input.

 

[Worldly1]

Some questions to help clarify the position:

• Is your wife a director of the company?
• Have you or your wife purchased shares based on that inside information?

I'm presuming the answer to those questions will be 'no'. It would only be an offence under the Corporations Act if your wife traded using inside information, or communicate inside information to others who will, or are likely to, trade on the inside information, such as yourself. See: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1043a.html. I can't recall a legal obligation of an employee to report insider trading to ASIC (the Australian Securities and Investments Commission), but ASIC is the authority to whom you would report/make the complaint and they would investigate the claim.

You have good reason to be cautious as insider trading is a serious white collar crime, see recently: 'Greedy' pair Lukas Kamay, Christopher Hill jailed over $7 million ABS insider trading scam - ABC News (Australian Broadcasting Corporation)

 

[draziw]

Some questions to help clarify the position:

• Is your wife a director of the company?
• Have you or your wife purchased shares based on that inside information?

I'm presuming the answer to those questions will be 'no'. It would only be an offence under the Corporations Act if your wife traded using inside information, or communicate inside information to others who will, or are likely to, trade on the inside information, such as yourself. See: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1043a.html. I can't recall a legal obligation of an employee to report insider trading to ASIC (the Australian Securities and Investments Commission), but ASIC is the authority to whom you would report/make the complaint and they would investigate the claim.

You have good reason to be cautious as insider trading is a serious white collar crime, see recently: 'Greedy' pair Lukas Kamay, Christopher Hill jailed over $7 million ABS insider trading scam - ABC News (Australian Broadcasting Corporation)

Hello. Thank you for your reply.

You are correct; my wife is not a director, nor has she or I purchased shares, so it's a relief to know she is noy implicated through awareness alone

I guess the question now is whether or not what the senior Manager has done is illegal and, if so, does my wife mention this to anyone on moral grounds?