FLSB-Business ethics-insider dealing

FLSB-Business ethics-insider dealing - Functions of Law in...

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105/04/20 1 Functions of Law in Society Functions of Law in Society and Business—Business and Business—Business Ethics—Insider dealing Ethics—Insider dealing
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105/04/20 2 Business Ethics and insider Business Ethics and insider dealing dealing Is insider dealing a breach of business ethics? According to some economists, the free market principle and the non-intervention policy should be given its fullest meaning and in fact, they argued the relaxation of control of insider dealing is conducive to economic growth and economic gain from insider dealing is a monetary incentive for officers of the company.
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105/04/20 3 Business Ethics and insider Business Ethics and insider dealing dealing But we still need to uphold the minimum standard of business ethics Why the act of insider dealing is objectionable? Why it offends our sense of fair play? Hurt the interest of the general public, when you access relevant information you cannot rely on this to gain profit, maintain the confidence of the stability and integrity of the stock market Basically, we still need to maintain the confidence in the stability and integrity of the market
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105/04/20 4 Securities and Futures Securities and Futures Ordinance Ordinance A person connected with a company listed in Hong Kong who is in possession of relevant information about the company is prohibited from dealing in the securities of that company. Applies to list company only.
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105/04/20 5 Securities and Futures Ordinance— Securities and Futures Ordinance— Interpretation of the essential terms Interpretation of the essential terms It applies to listed company only. A person connected with a company means directors, employees and substantial shareholders (holds more than 5% shares) . Relevant information must be information which is not yet generally known to persons who would be likely to deal in the securities of the company and if it were generally known to them, it would have a material impact on the price of those securities. Confidentiality Price Sensitive (+ve/ -ve impact on price)
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105/04/20 6 Securities and Futures Ordinance— Securities and Futures Ordinance— Interpretation of the essential terms Interpretation of the essential terms --If a connected person a) deals in the shares or b) counsels and procures anyone else to do or c) passes the information to a third party with reasonable cause to believe that he would deal in the shares then it will give rise to insider dealing --It is legitimate to ask: what is the whole purpose of passing the information if it is not intended that the third party will buy the shares? Tipper: disclose information, Tippee: receive information
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105/04/20 7 The problem of enforcement The problem of enforcement and prosecution and prosecution There are only a handful court cases dealing with criminal insider dealing in Hong Kong It was not until 2008 that the government initiated criminal prosecution Why there is a problem of enforcement?
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