MAM-2.13 MAM-2.13 Defences
MAM-2.13.1
In line with Article 101 of the CBB Law: "The mere trading by any person with inside information in securities, or encouraging others to trade therein, shall not be considered as a violation to this chapter if,
(1) He did not, at the time, expect that he will make a profit due to the inside information;(2) He reasonably believed at the time of dealing that the information had been disclosed widely enough that none of those taking part in the dealing would be prejudiced by not being aware of the said information;(3) He would have acted as he did even if such information was not available to him."This defence will be available only in cases where the person has reasonable or sufficient grounds to believe that the information had been "Information disclosed widely enough" as referred to in this Module.
November 2010MAM-2.13.2
In line with Article 102 of the CBB Law: "A person with inside information shall not be violating this chapter if he proves that he did not expect, at the time of disclosure, any person to trade in such securities based on such information, or that he did expect such trading but never thought that such person would make profits because the disclosed information was an inside information."
This defence will be available only for cases where the disclosure of information is made in the proper performance of the functions, office or profession.
November 2010MAM-2.13.3
In line with Article 103 of the CBB Law: "A person shall not be violating this chapter by virtue of dealing in securities or encouraging another person to deal, if he proves that he had acted in good faith in the course of his business as a licensed mediator or his employment with a mediator."
This defence will be available only in cases where the person has acted in his capacity as an investment firm licensee or an underwriter and the transactions are covered by the exceptions provided under sections MAM-2.6 or MAM-2.11.
November 2010MAM-2.13.4
In line with Article 104 of the CBB Law: "An individual is not guilty of inside dealing by virtue of dealing in securities or encouraging another person to deal if he proves that:
(1) The information, which he had as an insider, was market information;(2) It was reasonable that any person in their position would have acted similarly despite having such information as an insider at the time. In determining the appropriateness of such action, a special consideration shall be given to the content of the information, the circumstances in which it was first acquired and in what capacity did he act at the time of dealing."This defence will be available only if the individual proves that there was parity of information available as per section MAM-2.12.
November 2010MAM-2.13.5
In line with Article 105 of the CBB Law: "A person shall not be guilty of inside dealing by virtue of dealing in securities or encouraging another person to deal if he proves that:
(1) The securities were, at the time of dealing, under consideration or negotiation, or that the dealing took place during the course of a series of such negotiations;(2) The dealing was intended to facilitate the negotiation of securities or execute a series of negotiations of such securities;(3) The dealing was completed in accordance with the Central Bank's price policies."The first two defences mentioned in this rule will be available only for exceptions specified in section MAM-2.9 or MAM-2.10. The third defence mentioned in this rule will be available only for price stabilization transactions undertaken by a market maker who should also be a Category 1 Investment Firm Licensee.
November 2010
