Wynne, an audit senior, learns during an audit that her client Tidewater plc is about to announce a large unexpected loss. The information has not been made public. She tells her brother about it. He knows she audits Tidewater and realises the news has not yet been announced, and he immediately sells his Tidewater shares on the stock exchange before the announcement. Under the Criminal Justice Act 1993, who has committed an insider dealing offence?

Correct answer: C) Both: Wynne by disclosing the information otherwise than in the proper performance of her employment, and her brother by dealing as an insider who knowingly obtained inside information from an inside source

Explanation

Wynne is an insider because she knowingly has inside information through access by virtue of her employment or profession (s57(2)(a)(ii)). By passing it on other than in the proper performance of her work she commits the disclosure offence (s52(2)(b)), and the s53 defence that she did not expect anyone to deal is unrealistic when she told a shareholder. Her brother is also an insider: he knows the information is inside information, and he knows he has it from an inside source, since its direct source is a person with access through her profession (s57(2)(b)). By selling on a regulated market he commits the dealing offence (s52(1)). Avoiding a loss counts as much as making a profit, and the dealer need not work for the company or its auditors.