Unpublished price sensitive information alone is insufficient for insider trading; a bona fide distress sale may avoid liability.

Termination of the shareholders agreements was treated as unpublished price sensitive information because disclosure could materially affect securities prices and market perception. However, insider trading liability also required an attempt to exploit that informational advantage; on the facts, the share sale was made before any favourable market impact could arise and was driven by pressing financial necessity linked to a restructuring package. It was therefore characterised as a distress sale rather than an abusive trade, so the insider trading prohibition was not attracted and the Tribunal's order was left undisturbed.

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Issues: (i) Whether the termination of the two shareholders agreements constituted price sensitive information within the meaning of the insider trading regulations. (ii) Whether the respondent's sale of shares, in the circumstances in which it was made, fell within the mischief of insider trading.

Issue (i): Whether the termination of the two shareholders agreements constituted price sensitive information within the meaning of the insider trading regulations.

Analysis: Price sensitivity under the regulatory scheme turns on whether the information, if published, is likely to materially affect the price of securities. The deemed categories in the explanation to the definition include significant changes in policies, plans or operations of the company. On the facts, termination of the agreements was capable of materially affecting market perception and could place existing shareholders in an advantageous position once disclosed.

Conclusion: The information concerning termination of the two agreements was price sensitive information.

Issue (ii): Whether the respondent's sale of shares, in the circumstances in which it was made, fell within the mischief of insider trading.

Analysis: A violation of the insider trading prohibition requires not merely possession of unpublished price sensitive information and trading, but an attempt to take advantage of that information. The surrounding circumstances showed that the respondent sold shares before the information could have a favourable public-market impact and did so under pressing financial necessity connected with a corporate restructuring package. The sale was therefore treated as akin to a distress sale rather than an attempt to encash the information.

Conclusion: The respondent's sale of shares did not amount to insider trading.

Final Conclusion: The appeal failed because, although the information was price sensitive, the respondent's transaction was not shown to be an abusive exploitation of that information, so the Tribunal's order was left undisturbed.

Ratio Decidendi: Under the insider trading regulations, liability requires trading in possession of unpublished price sensitive information with an attempt to take advantage of that information; where the transaction is not designed to encash the informational advantage and is instead consistent with a bona fide distress sale, the prohibition is not attracted.

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