Investment portfolio sale for acquisition funding was not price sensitive information under insider trading regulations.
A listed investment company's decision to sell part of its investment portfolio to fund a new acquisition was held not to be price sensitive information under insider trading regulations. Price sensitive information must be likely to materially affect the price of securities, and the statutory explanation for disposal of a substantial part of an undertaking could not be stretched to cover an investment company's stock-in-trade. Non-disclosure of the funding source, without an inherently price-sensitive transaction, did not amount to a regulatory breach. No violation of the insider trading regulations was made out.
Issues: Whether a listed investment company's decision to dispose of part of its investment for raising funds for a new acquisition constituted price sensitive information requiring disclosure under the insider trading regulations.
Analysis: Price sensitive information is information which, if published, is likely to materially affect the price of securities, and the statutory explanation treats certain events as price sensitive, including disposal of the whole or substantial part of an undertaking. A decision by an investment company to switch or dispose of part of its investments in the ordinary course of its business does not, by itself, materially affect the price of its securities. The expression "undertaking" in the explanation cannot be stretched to cover investments held by an investment company as its stock-in-trade. The non-disclosure concerned only the source of funding and not a transaction that was inherently price sensitive.
Conclusion: The decision to dispose of part of the investment was not price sensitive information and no violation of the insider trading regulations was made out against the appellants.
Ratio Decidendi: For an investment company, a decision to sell part of its investment portfolio to finance a business acquisition is not price sensitive information unless it is shown to be likely to materially affect the price of its securities.
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