Market abuse · Question 11 of 12
An employee of Muster AG learns of a still-secret takeover in a meeting. In the evening, the employee buys shares in the takeover target and advises a friend to buy too. Which statements are correct?
3 answers are correct. Hard
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Answer
- A The employee's own purchase is prohibited insider dealing
- B The recommendation to the friend is also prohibited
- D The friend may also breach the prohibition if the friend knows or ought to know that it is inside information
Explanation
The upcoming takeover is precise, non-public and price-relevant information. Anyone who trades on it, recommends others to trade or discloses it unlawfully breaches the Market Abuse Regulation. There is no de minimis threshold; in Germany, prison sentences or fines are possible.