Insider Dealing vs Unlawful Disclosure: Is Sharing Deal Information Illegal?

Table of Contents

• • First decide whether the information is actually inside
• • Insider dealing is not limited to a new buy order
• • Unlawful disclosure can happen without any trade
• • When sharing with a professional adviser may be legitimate
• • What to do with an accidental leak or uncertain request
• • Do not merge civil market abuse with criminal offences

Insider dealing and unlawful disclosure are different problems. A person can create a market-abuse issue by sharing inside information even if they never buy or sell a share.

A Reddit question about explaining problems at an employer during an interview captures the uncertainty: does talking, rather than trading, matter? The answer depends on the information and circumstances—not simply whether the speaker owns shares.

For CISI MAMR, use the sequence information → conduct → permitted purpose → response. This page explains that sequence through hypothetical takeover situations. It is educational guidance, not a determination about the person in that discussion or advice on a live disclosure.

First decide whether the information is actually inside

“Confidential” and “inside information” are not interchangeable. A private seating plan can be confidential without being market-sensitive. Unannounced takeover negotiations may be different.

For an ordinary securities example, assess whether the information is:

• sufficiently precise;
• not public;
• related directly or indirectly to an issuer or financial instrument;
• likely, if public, to have a significant price effect.

Also establish whether the instrument and circumstances fall within the relevant regime. The FCA’s explanation of identifying inside information uses the reasonable investor’s likely use of the information as an important assessment aid.

Do not conclude that every rumour qualifies. Equally, “the deal is not signed” is not a complete answer. An intermediate stage in a process can be sufficiently precise; certainty of completion is not the only way information becomes significant.

In a case, write down the evidence for each limb rather than merely labelling the document “confidential”.

Insider dealing is not limited to a new buy order

Consider an employee with an existing sell order. The employee learns inside information about a likely bid premium and cancels the order because of it.

The fact that the order was placed earlier does not resolve the issue. The FCA’s UK MAR overview explains that using inside information to amend or cancel an existing order can constitute insider dealing.

A different scenario involves an adviser telling a relative to buy shares without explaining the reason. Analyse recommending or inducing dealing on the basis of inside information; do not assume that withholding the detailed facts makes the instruction harmless.

For exam purposes, identify the actual act: buying, selling, amending, cancelling, recommending, inducing or disclosing. “The employee did not buy shares” eliminates only one possible behaviour.

Unlawful disclosure can happen without any trade

An adviser tells a friend about an unannounced, price-sensitive takeover simply because the story is interesting. Assume the information meets the inside-information test.

The key issue is disclosure outside the normal exercise of employment, profession or duties. The adviser need not personally trade for the disclosure prohibition to matter.

This is not just a theoretical distinction. In Primary Market Bulletin 54, the FCA addressed leaks concerning live M&A discussions, including strategic leaks and hints at sensitive information. Omitting an exact price does not necessarily make a hint safe.

The prohibition also extends beyond employees of regulated firms. A job title is not a substitute for analysing the information and behaviour.

That is why an interview, a private chat or a conversation with a major shareholder cannot be assumed exempt merely from its setting. Explain the legitimate purpose and applicable conditions, if any.

When sharing with a professional adviser may be legitimate

A transaction cannot function if nobody can tell its lawyers or accountants anything. But “the recipient is a professional” is not blanket permission.

Suppose an appointed lawyer needs a particular deal document to advise on the transaction. The relevant questions are whether sharing it is necessary for that work, occurs in the normal exercise of duties, and uses appropriate confidentiality and access controls.

Compare that with giving the same document to an acquaintance who happens to be a lawyer but has no role in the deal. The recipient’s profession has not supplied the missing purpose.

Likewise, an NDA is a control, not a universal exemption. Asking a friend to sign one so they can invest on the information does not solve the substantive problem.

A useful answer links the control to the risk: limited recipients reduce unnecessary access; secure channels reduce accidental distribution; a recorded purpose makes the reason for sharing inspectable. Do not turn these safeguards into a claim that compliance paperwork overrides the law.

What to do with an accidental leak or uncertain request

If a document reaches the wrong recipient, do not improvise a market announcement, destroy the record or wait to see whether someone trades.

Escalate promptly through the firm’s compliance and legal process. Preserve the basic facts: what was sent, when, to whom and what access is known. The appropriate team can assess containment, whether confidentiality remains intact and whether any announcement or regulatory report is required.

For an uncertain interview question, the practical first step is narrower: avoid disclosing protected specifics while clarifying what can properly be said. Even information that does not meet the UK MAR test may remain subject to contractual or professional confidentiality.

These are incident-handling principles, not a rule that every employee must personally file the same regulatory report. Reporting duties depend on the actor and circumstances.

Do not merge civil market abuse with criminal offences

UK MAR’s civil regime sits alongside criminal insider-dealing and market-abuse offences. They are not interchangeable labels with identical elements, defences and sanctions.

The FCA’s market-abuse guidance explains its civil and criminal enforcement role. When answering a question, identify which regime it asks about before discussing the test or consequence.

This also prevents exaggerated answers: suspicious conduct is not automatically a proven criminal offence, and the absence of criminal proceedings does not establish that conduct complies with UK MAR.

Use the 15 original scenarios above to practise classification. After each error, record the missed fact—public status, precision, order cancellation, improper purpose or a separate prohibition. The existing MAMR exam guide covers assessment planning; Exams Academy’s CISI MAMR course connects these regulatory decisions with the other transaction topics.