Unpublished price sensitive information and trading nexus were not proved, so insider trading liability could not stand.

Termination of a shareholders' agreement was not shown to be unpublished price sensitive information because the event involved a comparatively small exposure, did not materially affect the company's securities, and was not price sensitive merely due to corporate restructuring. On the trading allegation, the regulator failed to show that the appellant dealt in the securities on the basis of that information; the appellant's explanation of contemporaneous funding needs rebutted the presumption of motive, and reliance on incorrect market-price data weakened the avoided-loss theory. The insider trading finding and disgorgement could not be sustained.

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Issues: (i) Whether the information regarding termination of the shareholders agreement constituted unpublished price sensitive information. (ii) Whether the appellant had traded on the basis of such information so as to attract liability for insider trading.

Issue (i): Whether the information regarding termination of the shareholders agreement constituted unpublished price sensitive information.

Analysis: The information related to a comparatively small exposure in relation to the company's order book and turnover, while the larger project effectively remained with the company. The termination did not, on the facts, establish a material adverse impact on the company's securities and could not be treated as price sensitive merely because it involved a corporate restructuring. The absence of disclosure by the counterparty did not alter this conclusion.

Conclusion: The information was not proved to be unpublished price sensitive information.

Issue (ii): Whether the appellant had traded on the basis of such information so as to attract liability for insider trading.

Analysis: Even assuming the information to be price sensitive, the appellant explained the contemporaneous need for funds under the restructuring package and the sale of assets and shares to meet that requirement. On the material placed, the presumption that the trade was executed on the basis of the information stood rebutted. The market price data used by the authority was also not taken from the correct disclosure date, weakening the inference of avoided loss.

Conclusion: The appellant did not trade on the basis of the information and was not liable for insider trading.

Final Conclusion: The impugned order imposing insider trading liability and disgorgement could not be sustained, and the appeal succeeded in full.

Ratio Decidendi: To sustain insider trading liability, the regulator must establish both that the information was price sensitive and unpublished, and that the insider traded on the basis of that information; where the alleged information is not materially price sensitive or the presumption of motive is rebutted by credible evidence, liability cannot stand.

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