6-2 Disclosure Of Inside Information
(1) Section 92
(3) of the FSMR provides that Market Abuse will constitute instances where:
"...an Insider discloses Inside Information to another person otherwise than in the proper course of the exercise of his employment, profession or duties."
Disclosure "in the necessary course of business"
(2) Section 92
(3) does not prohibit the disclosure of Inside Information by an Insider to another person if the disclosure is made in accordance with the Insider's employment, office, profession or duties.
(3) The Regulator would ordinarily consider the following disclosures of Inside Information made for regulatory purposes to be made in accordance with the Insider's employment, office, profession or duties:
(a) disclosure of Inside Information which is required or permitted under the FSMR;
(b) disclosure of Inside Information to the Regulator for the purpose of fulfilling a legal or regulatory obligation or otherwise to assist the Regulator to perform its functions; or
(c) disclosure of Inside Information to another regulatory authority for the purpose of fulfilling a legal or regulatory obligation or otherwise for the purpose of assisting that regulatory authority to perform its functions.
(4) In other cases, the Regulator is likely to take into account the following factors in determining whether or not the disclosure was made in the necessary course of business:
(a) whether the disclosure is permitted by the ADGM Rulebook, the rules of the relevant market or regulatory requirements relating to a Takeover;
(b) whether the disclosure is accompanied by the imposition of confidentiality requirements upon the person to whom the disclosure is made and is:
(i) reasonable and is to enable a person to perform the proper functions of his employment, profession or duties;
(ii) reasonable and is (for example, to a professional adviser) to facilitate, or seek advice about, a transaction or Takeover bid;
(iii) reasonable and is for the purpose of facilitating any commercial, financial or investment transaction (including prospective underwriters or places of Financial Instruments);
(iv) reasonable and is for the purpose of obtaining a commitment or expression of support in relation to a Takeover Offer; or
(v) in fulfilment of a legal obligation; or
(i) the information disclosed is Trading Information;
(ii) the disclosure is by a person, A, only to the extent necessary, and solely in order, to Offer to dispose of the Financial Instrument to, or acquire the Financial Instrument from, the person receiving the information; and
(iii) it is reasonable for A to make the disclosure to enable him to perform the proper functions of his employment, profession or duties.
Dealing not required
(5) A person may contravene section 92
(3) by disclosing Inside Information to another person even though the recipient does not deal on the basis of that information. That is, it is sufficient that the Inside Information is disclosed to another person, other than in accordance with the Insider's employment, office, profession or duties, without the need to show that any harm was caused.
Examples of improper disclosure of Inside Information
(6) The following are general examples of Behaviours that, in the Regulator's view, may amount to improper disclosure:
(a) disclosure of Inside Information by the Director of an Issuer to another in a social context; and
(b) selective briefing of analysts by Directors of Issuers or others who are persons discharging managerial responsibilities.
(7) The following are specific examples of conduct that, in the Regulator's view, may contravene section 92
(a) A, a Director of a Company (an Authorised Person) has lunch with a friend, B, who has no connection with the Company or its advisers. A tells B that his Company has received a Takeover Offer that is at a premium to the current share price at which it is trading;
(b) B is the CEO of a Company (an Authorised Person) that is about to release its annual financial report. The report will disclose an outstanding claim that will have a significant impact on the Company's financial results. B passes the information on to family members (who have no role in the Company);
(c) an Officer or Employee of an Issuer selectively briefs analysts about developments relating to the Issuer that have not yet been disclosed to the market; and
(d) the chairman of an Authorised Person announces his resignation to a journalist before this information has been disclosed to the market as a whole.