Question

CASE STUDY QUESTION

Michael works as a lab technician for ABC Pharma Pty Ltd(Pharma). In a confidential work meeting, his manager advised their newly developed virus vaccine was being approved for distribution by the Therapeutic Goods Administration (TGA), a development not known to the public as yet. Michael knows it will affect the share price, so that same day he asked his brother Bill to buy 100,000 shares at $2.00 in Pharma. Two days later, TGA gave its approval for the vaccine and the Pharma share price jumped to $6.00.

(a) Advise any offence that Michael has committed .

(b) In relation to any alleged offence committed by Michael, describe what the prosecution must prove .

Answer 1

Ans.

The offence Micheal has committed is called "Insider Trading" as per Companies Act.

Insider Trading is the illegal practice involves the trading of shares on Stock Exchange and taking for own advantage by using Confidential Information of any corporate. This is illegal in the eyes of law & a heavy criminal penalty is provided in the Companies Act for such offence.

What Mischeal has done is just passed the Confidential information of manufacturing of vaccine approval by TGA in a meeting to his brother & subsequently buying the shares of the same company and thereafter prices of same hiked also. This is an offence of Insider Trading committed by Mr Micheal.

Ans.2

Prosecution for Insider trading is fine of $ 5 Million as an individual (up to $25 million for a business entity), up to 20 years imprisonment, or both fine and imprisonment.