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Insider Dealing in the information Age

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1 Insider Dealing in the information Age on Mon Oct 30, 2017 2:06 pm

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Dealing is in essence an offence relating to the abuse of information, which in this information era has acquired a level of importance equal to, if not exceeding, what was achieved by offences involving property such as theft, misappropriation and criminal breach of trust with the advent of the industrial revolution.

A – Introduction
The recent Aitken Spence controversy, which led to the resignation from their respective posts of the Chairman as well as the Director General of the Securities and Exchange Commission of Sri Lanka, has brought into focus the provisions of law in force in Sri Lanka for the combat of insider dealing. Insider dealing is in essence an offence relating to the abuse of information, which in this information era has acquired a level of importance equal to, if not exceeding, what was achieved by offences involving property such as theft, misappropriation and criminal breach of trust with the advent of the industrial revolution.

The importance of information in the context of the capital market has been stressed in a recent article on the subject, in the following words:-
“The stock exchange is a cornerstone of the capital market. It is in fact a market where publicly quoted shares are bought and sold by members of the public, both corporate and individual. Share trading is driven by information. Good news drives the share prices up whilst bad news brings them down. The individual investor’s decision to buy or sell as well as the price at which he elects to trade is dictated by the information he holds regarding the relevant shares.

Without access to timely and accurate price sensitive information he will not be well placed to safeguard his investment. Conversely, an investor who has access to such information is well placed to make a profit or avoid a loss. The latter enjoys an obvious advantage over the former.”1

Insider dealing is a serious white color crime. It involves the improper use of price sensitive information in breach of confidence. Such conduct has been prohibited in several jurisdictions including Sri Lanka with a zeal that has been described as an “almost international obsession”.2 Insider dealing has been regarded as immoral and likened to cheating at cards.

In Sri Lanka, the crime of ‘insider dealing’ has been dealt with in three different statutory contexts. Firstly, Part V of the Companies Act3 contains provisions that seek to define and penalise insider dealings with respect to all companies, whether listed or not. These provisions have not yet been brought into operation.4 Secondly, Part IV of the Securities and Exchange Commission of Sri Lanka Act5 (hereinafter referred to as the SEC Act) contain almost similar provisions, but which are applicable only to listed public companies. Thirdly, the Company Takeovers and Mergers Code of Sri Lanka6 (hereinafter referred to as the Takeovers Code) also prohibits insider dealings in the course of company takeovers or mergers.

The type of conduct prohibited by the law relating to insider dealing may be illustrated with two examples. In Lord Advocate v Mackie7, a financial analyst, was given information by the Chairman of a company about the forthcoming issue of a profits warning by the company. The analyst passed on this inside information to two of his colleagues who dealt in those shares making considerable profit. Similarly, in the film titled ‘Wall Street’, the character known as Bud Fox, played by Charlie Sheen, became part owner in an office cleaning company in order to ‘steal’ inside information for a law firm. In terms of the provisions of the Sri Lankan Penal Code8 dealing with offences against property, such information would not be regarded as stolen or misappropriated as something physical has to be taken in order to constitute such offences.9 However, such conduct may come within the scope of the insider dealing provisions mentioned above.

B – The SEC Act provisions
In view of the position that the insider dealing provisions of the Companies Act have not yet been brought into operation, and their similarity to Part IV of the SEC Act, it is convenient to focus on the provisions of the latter Act, while noting any significant points of contrast. Part IV of the SEC Act applies with respect to listed securities of all listed public companies.

According to Section 32(1) of the SEC Act, an individual who is knowingly connected with a company shall not trade in listed securities of that company, if he has information which-
he holds by virtue of being connected with the company;
it would be reasonable to expect a person so connected and in the position by virtue of which he is so connected, not to disclose except for the proper performance of the functions attached to that position; and
he can be reasonably expected to know is unpublished price sensitive information in relation to those securities.

Similarly, Section 32(2) provides that an individual who is connected with a company shall not trade in listed securities of any other company if he has information which-
he holds by virtue of being connected with the first mentioned company;
it would be reasonable to expect a person so connected and in the position by virtue of which he is so connected not to disclose except for the proper performance of the functions attached to that position; he can reasonably be expected to know is unpublished price sensitive information in relation to those securities of that other company; and relates to any transaction whether actual or contemplated, involving both the first mentioned company and that other company or involving one of them and securities of the other or to the fact that any such transaction is no longer contemplated.

While the above quoted sub-sections of Section 32 constitute the main offences of insider dealing, the remaining five sub-sections of the Section seek to apply the principles of liability to individuals who communicate,10 counsel or procure11 and obtain12 inside information with a view of profit. From the stand point of take-overs and mergers, Section 32(4) is of special interest as it provides that an individual who is contemplating, or has contemplated, making a take-over offer for a company in a particular capacity, shall not trade in listed securities of that company in another capacity if he knows that the information that the offer is contemplated or is no longer contemplated is unpublished price sensitive information in relation to those securities. Section 32(5) merely applies this prohibition to an individual who has obtained such information from another person.

All these provisions are expressly made subject to Sections 32(Cool and 32(9) of the Act which provide certain defences. According to Section 32(Cool (a) it will be a good defence to a charge of insider dealing that the particular thing was done “otherwise than with the view to the making of a profit or the avoidance of a loss”. Hence, for example, a person who gives out price sensitive information while drunk or to enhance his self-esteem, will not be liable.

Similarly, according to Section 32(Cool(c), a stock broker or dealer who obtains such information in the course of his business as such, and does anything with it “in good faith in the course of that business” will not be liable. According to Section 32(9), an individual who has information relating to any particular transaction will not be liable if he does anything “to facilitate the completion or carrying out of the transaction”.

C – The requirement of ‘connection’ with the company
The principal category of insider under the SEC Act was defined by reference to a ‘connection’ with a company.13

According to the original Section 34(1) of the SEC Act, this connection may be established in one of two ways: firstly, by being a director of the company concerned or a related company14 and secondly, by being an officer (other than a director) or employee of the company or a related company, or by holding a position involving a professional relationship between himself and the first company or a related company, which, in either case, might reasonably have been expected to have given him access to inside information in relation to either company.15 A mere shareholder would not be an insider according to this definition.

The insider dealing provisions of the original SEC Act appear to have been fashioned on the legislation enacted in England in 198516. It is relevant to note that this Act has been replaced in England by the Criminal Justice Act 1993.17 In the latter Act there is no requirement that an insider has a connection with a company, although, clearly, true insiders, such as corporate officers, will have that connection as a matter of fact. Instead, a person will have information as an insider if: the information is, and he knows that it is, inside information
he has the information and he knows that he has it, from an inside source.18

The 1993 Act provides that a person has information from an inside source only if:
he has the information through being a director, employee or shareholder or an issuer of securities or has access to the information by virtue of his employment, office or profession
or the direct or indirect source of his information is a person within paragraph (a).19

The provisions of the SEC Act, modelled on the English legislation of 1985, embrace three distinct classes of persons, namely the so-called true insiders (directors, officers and employees of the body which issued the securities), temporary insiders (those on the periphery of that body who gain access to the information) and, finally, tippees of the information. Compared with this, there are three major extensions of the concept of who is an insider under the 1993 legislation of England.

First, the net goes wider than companies and now embraces ‘issuers of securities’20 and public sector bodies.21

Second, shareholders are included for the first time.

Third, a simple ‘access to information’ test replaces the need under the previous legislation to be connected with a company. It has been observed that the UK Act of 1993 imposes liability by reference to ‘informational advantage’ rather than by reference to status”. These extensions are the result of the European Community Directive on Insider Dealing.
23 Accordingly, a local government officer of a District Council will, for the first time, be within the ambit of the legislation, in relation to the Council’s securities. An employee of a foreign government will also be covered, in relation to that government’s securities, as will a UK minister or civil servant in relation to gilts.

In USA, where too the basis of liability is ‘informational advantage’, the liability is even wider. The most extreme case of liability arose a few years ago in a US case concerning the ‘Heard on the Street’ column in the Wall Street Journal.24

In that case, a columnist gave other individuals advance information about the contents of his column in the newspaper. It was known that favourable mention of any share in that column would influence the price beneficially. Profits were therefore made by dealing in advance of the publication of the column on the basis of information to be contained in it.

Significantly, the information in the columns was not received from any insider of a corporation. It was simply the view of the journalist who wrote it. In terms of the applicable US Law, the columnist was convicted of insider dealing, apparently on the basis that he had taken confidential business information from the Wall Street Journal.

It has been suggested that under UK law, which has now based insider liability on informational advantage rather than by connection to an issuer, a similarly placed columnist could also become liable for insider dealing. Such a view, however, would not appear to be correct for the reason that in the UK legislation the statutory definition requires, as we have seen, inside information to come from an inside source. It is unlikely that a court would hold that information generated by a columnist himself would be regarded as information obtained through having ‘access’ to it.

It is noteworthy that an ‘access to information’ test wider than what is found in the UK legislation of 1993, and very much resembling the test applied in the United States, has been introduced into Sri Lanka by the Securities and Exchange Commission of Sri Lanka (Amendment) Act of 2003.26

The new Sri Lankan provision, does not seek to replace the ‘connection’ with the company test with the ‘access to information’ test as was done in the United Kingdom, but merely adds into the two fold definition of ‘connection’ with the company found in Section 34(1) of the SEC Act a third category of persons. The new category consists of an individual who “has access to information in relation to listed securities, which he knows, is unpublished price sensitive information and which it would be reasonable to expect him not to disclose except in the course of performing his duties.”27

The amendment, appears to follow US rather than UK law, and does not expressly require that the information should have emanated from an inside source.

Section 33 of the SEC Act contains a provision which exposes public servants or former public servants to liability for insider dealing.28

This provision does not extend to members, officers and servants of the Securities and Exchange Commission of Sri Lanka as they are simply not ‘public servants’.29

A serious deficiency in the SEC Act is the glaring omission to provide against the use of price sensitive information gathered in the course of the discharge of their duties by the members, officers and servants of the Securities and Exchange Commission. The Takeover Code provisions30 will cover such persons, but are restricted to the offer period. However, a member, officer or servant of the Securities and Exchange Commission who trades in listed securities using price sensitive information acquired by him by virtue of being a Director or person otherwise connected to a company, can still be liable for insider dealing under Section 32 of the SEC Act.

It is useful to consider some special categories of persons who are or ought to be liable for insider dealing in the context of the SEC Act.
True insiders: company shareholders

Under the SEC Act, while directors, officers and employees of a company are clearly insiders, a shareholder would not be regarded as an insider. Curiously, all shareholders are regarded as insiders in the current U.K legislation31. The United States law seeks to strike a balance between these two extremes, and regards only controlling shareholders as insiders. This is because such persons are likely, given their power, to have a similar degree of access to information as a director 32

A shareholder not having such control is unlikely to be in that position and consequently is effectively excluded from the United Kingdom legislation although remaining nominally, within it. It is necessary to consider amending the SEC Act in this respect.

Temporary insiders
On the periphery are people who may be termed ‘temporary insiders’. These people, whilst being outsiders, may gain access to information by virtue of their position. Typically, those included will be lawyers, accountants, merchant bankers and other professionals with whom companies deal.33 However,
the class need not be restricted to them. In terms of the original Section 34(1) of the SEC Act, temporary secretaries, security staff, company printers and many others could potentially be regarded as having access to information by virtue of their employment or “position involving a professional or business relationship”34.

The provision was only aimed at one who is in such a position which “may reasonably be expected to give him access to information”.33

Thus, a window cleaner who in the course of cleaning the windows obtains inside information may not be regarded as an insider even temporarily. It is however, important to note that the 2003 amendment, which imposes liability by reference to ‘informational advantage’ rather than by reference to status, has spread the net wider and could also catch up the inquisitive window cleaner.

Tippees
In terms of the SEC Act, a Tippee is an individual who “has information which he knowingly obtained, whether directly or indirectly, from another individual who is connected with a particular company…..and the former individual knows or has reasonable cause to believe that, because of the latter’s connection and position, it would be reasonable to expect him no to disclose the information except for the proper performance of the functions attached to that position”36

In this context, the decision in R v Fisher37 is of considerable interest. The case concerned shares in Thomson T Line plc, the greater part of which were family-owned. When the family decided to sell their shareholdings they instructed a merchant bank to act on their behalf. The defendant showed interest as a prospective buyer and spoke to an executive of the merchant bank about a possible purchase of shares by him. The bank obtained instructions from the shareholders to deal with the defendant, but the shareholders did not regard him as a serious buyer and reached agreement with another prospective purchaser, Diamond Ltd, to sell the family shareholding in Thomson T Line plc for 50p a share. The shareholders instructed the executive at the merchant bank to tell the defendant what was happening. Before doing so the executive checked the facts with Diamond’s merchant bank and ‘was told that an announcement of the deal was to be made in the financial press the following morning.

That executive then telephoned the defendant and informed him that discussions about his acquisition of shares
in Thomson T Line could no longer be pursued, as another deal was likely to go through, and that there would be another announcement soon. The defendant then placed an order to purchase 10,000 T Line shares. The defendant was acquitted. One of the reasons for the acquittal was the construction placed by the trial Judge38 on the word ‘obtain’ in section 1(3) of the Company Securities (Insider Dealing) Act 1985.39

The decision illustrates the difficulties that could arise from the language of the 1985 UK legislation on which the SEC Act provisions are based. The extremely technical nature of the language and the problems of interpretation that could arise have been highlighted in a recent article on this subject.40 Under the applicable provisions, it seems unlikely that the defendant was a Tippee at all. The merchant bank, with which he was in contact, was acting not for Thomson T Line but for a shareholder in 25% of the capital who, under that legislation, was not even an insider. It was therefore not in a business or professional relationship with Thomson T Line and neither was its executive. In fact the executive was only connected with the merchant bank, not with Thomson T Line at all. In those circumstances it is difficult to see how the defendant could ever have been said to have knowingly obtained information from an individual connected with Thomson T Line, unless it had been shown that he knew that the source of the information was someone who was connected.

Problems of this nature have been greatly overcome in England by the 1993 legislation, under which individuals become Tippees if the direct or indirect source of their information is an insider.41 As with insiders, Tippees must be individuals and they can only be Tippees if they know the information they have is inside information and if they know that the direct or indirect source is an insider. There is no need for a Tippee to know the identity of the source of the tip, provided that he knows that the direct or indirect source of the tip was an insider. The recent amendment to the SEC Act42, through its broader definition of ‘connection’ with the company, has extended the liability of a Tippee even beyond the scope of the 1993 legislation of UK.

D – Price sensitive information
The information the use of which is prohibited by law is “unpublished price sensitive information”. As defined in the SEC Act43, this phrase refers to information which –
relates to specific matters relating, or of concern, (directly or indirectly) to that company, that is to say, is not of a general nature relating or of concern to that company
is not generally known to those persons who are accustomed or would be likely to deal in those securities but which would if it were generally known to them be likely materially to affect the price of those securities.’44
The important elements of this definition requiring further scrutiny are: (i) specificity, (ii) particularity, (iii) publicity, (iv) price-sensitivity and (v) confidentiality.

The formula adopted in the English Criminal Justice Act 1993 is slightly different, and is quoted below for purposes of comparison. The latter Act defines inside information as-
” Information which relates to particular securities or to a particular issuer of securities or to particular issuers of securities generally or to issuers of securities generally is specific or precise

(i) Specificity
To attract the provisions of the SEC Act, the information must relate to ‘specific’ matters. As noted earlier, the requirement in the Criminal Justice Act is ‘specific or precise’. The European Community Directive46 used the word ‘precise’ and the then existing UK legislation the word ‘specific’. The difference was explained by the British Minister in a communication addressed to the Standing Committee in the following words:

‘In general, specific information might typically be that a bid was going to be made. Precise information would be the price at which that bid was going to be made. On that basis, precise information would be narrow, exact and definitive. Therefore, its meaning could be construed extremely narrowly and would be a much narrower definition than that in the existing legislation. We believe that the addition of “specific” would keep the integrity of what was required by the Directive and what the existing legislation allows.’47 The ‘either/or’ should avoid the narrow interpretation of the word ‘specific’ adopted in Ryan v Triguboff, a New South Wales case where Lee J held in effect the
words ‘specific’ and ‘precise’ to be synonymous, and that:
‘specific information connotes not merely that it is precisely definable but that its entire content can be precisely and unequivocally expressed and discerned.’48

(ii) Particularity
The information should not be general in nature, and must be particular. However, under the SEC Act, there may be some circumstances in which general information may fall within the definition of inside information. For example, a proposed take-over is information that is certain to affect the equity securities of two companies, the bidder’s and the target’s. It may also affect the prospects of other companies in the sector, at least if the take-over bid is seen as likely to succeed. Even if not covered by the SEC Act provisions, this kind of situation will be caught up by the provisions of the Takeovers Code, discussed later in this article.

Similarly, a proposed new tax on a particular sector, like Banks or Oil Companies will affect equity securities of all the companies subject to the new impost and should still be considered inside information. It is not altogether clear weather proposed general changes in the level of taxation would be too general to qualify as inside information.

(iii) Publicity
According to the SEC Act, ‘unpublished price sensitive information’ is information that is:
‘not generally known to those persons who are accustomed or would be likely to deal in those listed securities but which would if it were generally known to them be likely to affect materially the price of those securities.’49

This is an extremely problematic definition. If information was generally known to such persons (who must at least include market-makers), the market price would have adjusted so that it ceased to be price-sensitive, which rendered the word ‘unpublished’ practically otiose. The current legislation in UK seeks to overcome this problem by providing that information is deemed to be public if it is:
officially published as required by a regulated market
contained in statutorily required records, readily available to those likely to deal in the relevant securities derived from information that has been made public.50

This provision too is not without problems. In terms of the provision, an insider can deal with securities without offending the law, immediately on the official release of information through the Stock Exchange before the market has time to absorb the information. Such ‘hair trigger trade’ has been held to be unlawful in the United States.51

The phrase “derived from information that has been made public” could also cause some concern. This element is aimed at protecting analysts, but there is some doubt about the efficacy of the wording. It is said that an analyst who is about to publish a dramatic change of recommendation to buy a particular security on the basis of his legitimate researches is free to buy the shares himself because it cannot be said that he had ‘access to inside information by virtue of his employment’ .52 But this may not always be the case. He knows that his change of view is* about to be widely published and that that itself is information that has not been made public and that will affect the price of the shares. It may be just to outlaw an analyst (or indeed a newspaper tipster) ‘front running’ in this way, but if he cannot deal, he cannot advise his in-house market-makers or favoured clients to ‘front-run’ and thereby his worth as an analyst to his firm is greatly reduced. If the definition of inside information included the concept of a breach of fiduciary duty, a distinction would arise between the personal use of the information by the analyst and the use of it for or by his employers.53

(iv) Price sensitivity
No guidance has been given in the SEC Act as to what is meant by the phrase “likely materially to affect the price of those securities.” The Takeover Code requires a company to make an announcement in circumstances where there is some “untoward movement in its share price.”54 The London City Takeover Panel, for the purposes or requiring statements about sharer price movements uses a 10% movement on one day as a benchmark.55 Takeovers are the one clear cut case for potential insider dealers. Where a bid is just about to be launched at a high price, no one can be in doubt that target’s share price will rise on the announcement, although by how much will depend on how the market sees the chances of the bid or any rival bid succeeding. While the market players may experience some anxiety, prosecutors have the advantage of the hindsight.

(v) Confidentiality
The information should also be of a confidential nature. Although the word ‘confidential’ does not appear in the Act, this element may be inferred from the requirement that information should emanate from someone ‘connected’ to the company by virtue of his position as an insider, which it was reasonable to expect such a person not to disclose, except for the proper performance of his duties. The Act sought to impose criminal liability only on someone who knew or ought to have realised that there had been a breach of confidence concerning information from within a company that allowed him or another to profit from the breach by dealing in corporate securities. It is interesting to note that the US Supreme Court has, by contrast, emphasised the breach of a fiduciary duty as a vital element in insider dealing.56 An illustrative decision is SEC V Texas Gulf Sulphur Co.57 TGS made a substantial mineral discovery in Canada. In order to acquire the land surrounding the discovery site at a favourable price TGS publicly denied rumours of the discovery.

At the same time certain TGS employees familiar with the discovery purchased TGS stock. If they had disclosed the mineral discovery they would have violated their fiduciary duty of confidentiality. These employees were found guilty of insider trading whilst TGS was guilty of making materially misleading disclosures.

However, it is unfortunate that the concept of a breach of confidence did not appear in the European Directive on the subject,58 and the law in the European Community, including English law has been influenced by this omission. Michael Ashe observes that “without speculative trading by professional market-makers and others, market liquidity dries up and with it the very justification for having a centralised market.”59

E – The Takeover Code
The Sri Lankan Takeover Code also takes serious note of the possibility of insider dealings in the context of a take-over offer.60 It insists on absolute secrecy61 and emphasises that every person privy to confidential price sensitive information concerning an offer or proposed offer should treat that information as secret and should not divulge such information to any other person unless it is necessary to do so for the purpose of preparing the offer document.62 It prohibits dealings of any kind in the securities of the offeree by any person who is privy to confidential price sensitive information upto the stage of the announcement of the offer.63 The Code also prohibits the unwarranted disclosure of confidential price sensitive information, even if it takes the form of recommendations.64

Except in the case of a partial offer, the parties to the .’ offer as well as their associates are free to trade in securities subjecting to making daily disclosures of the prescribed information to the Stock Exchange.65 However, the Code prohibits the sale of shares in the target company by the offer or or persons acting in concert with the offer or during the offer period without the approval of the Stock Exchange.66
According to the Sri Lankan Code, persons holding office as directors or employees of the companies involved in the offer and persons involved as professional advisors to such a director or company, persons who are in a position to have received information in the context of a confidential relationship as well as persons related to any of the above categories will be regarded as persons privy to price sensitive information for the purposes of the Code.67

It is important to note that there is considerable overlap between the insider dealing provisions of the SEC Act and the provisions of the Takeover Code. It will be noticed that the Code provisions are applicable only during the pendency of a takeover offer, while the provisions of the Act are more general. However, the Code provisions can be used even to charge a company for insider dealing, which will not be possible with the SEC Act as its provisions only catch up acts of ‘individuals’. The Code provisions do not use terminology introducing a subjective element, whereas the provisions of the Act are studded with concepts such as ‘knowingly, ‘reasonable’ and ‘good faith’ that could give rise to major difficulties of proof, and considerable amount of litigation. The Takeover Code does not expressly provide for any defences. The SEC Act provides for certain defences, such as those contained in Sections 32(Cool and 32(9) of the Act, which appear to be too liberal. In the event of a person charged with the contravention of Rule 28(1) taking up a defence in the lines of Section 32(Cool (a) of the Act, the question would arise as to whether the Code will be deemed to be ultra vires the Act insofar as the offences created by the Code are wider than the offences created by the Act.

F – Conclusions
The information revolution has brought about many changes in legal concepts. One such change is the
elevation of ‘information’ into a species of property protected by law. While legislation such as the Code of Intellectual Property Act68 are manifestations of this transformation, the draft Computer Crimes Bill69 and other such legislation in the offing reflect the underdeveloped state of the law.
Although insider dealing has been prohibited both by the Companies Act and the SEC Act in almost similar language, only the SEC Act provisions are operative in Sri Lanka. The provisions of Part IV of the SEC Act, however, apply only to listed securities of listed public companies. These provisions are also deficient in several respects and require urgent amendment. In the takeover context, insider dealing is also regulated by the Takeover Code, which is a rule made under the SEC Act. As noted above, there is a great deal of overlap and differences between the SEC Act provisions and the Takeover Code provisions on insider dealing.

In this scenario, it is unfortunate that the recent amendments to the SEC Act did not contain any elaborate amendments relating to insider dealing70. Well considered – if not innovative – legislation, as well as some reappraisal of judicial attitudes, is absolutely essential to combat theft, misappropriation and abuse of information in this information age, in which information has acquired greater value than corporeal property. Any delay in bringing about these legislative and attitudinal changes will undermine the credibility of the capital market and adversely affect the national economy.
1 C.R.de Silva, ‘A Factual Description of the Statutory Elements of the Offence of Insider Dealings in Sri Lanka’, (2000-2001) Meezan, page 23.
2 Rider, “Policing the City-Combating Fraud and Other Abuses in the Corporate Securities Industry”, (1988) 41 Current Legal Problems 47 at page 48.
3 The Companies Act No. 17 of 1982, as subsequently amended.
4 Section l(2)(b) of the Companies Act, supra note 3, provides that the provisions of Part V of the Act shall come into operation on such date as the Minister may, by Order published in the Gazette, specify. No date has been so far been specified by the Minister for this purpose. However, the other provisions of the Companies Act, came into operation on 2nd July 1982, which was the ‘appointed date’ fixed by the Minister by Order published in Gazette No. 199/14 dated 2nd July, 1982 in terms of Section 1(2)(a) of the Companies Act.
5 The Securities and Exchange Commission of Sri Lanka Act No 36 of 1987 as amended by Act No 26 of 1991 and the Securities and Exchange Commission of Sri Lanka (Amendment) Bill published in the Gazette of the Democratic Socialist Republic
of Sri Lanka Part II dated 18th October 2002 and passed by Parliament on 28th January, 2003 (but not certified by the Speaker at the time of going to press).
6 The Company Take-overs and Mergers Code, 1995 promulgated as a rule having the force of law in terms of Section 53 of the Securities and Exchange Commission of Sri Lanka Act, , and published in the Gazette Extraordinary of the Democratic Socialist Republic of Sri Lanka, Part I: Sec (1) of 16th June, 1995. See also, Saleem Marsoof, ‘Takeover Offers and their Ramifications’ (1998) Attorney General’s Law Review 90.
7 Financial Times, 31st March, 1993.
8 The Penal Code of Ceylon, Sections 366 and 386.
9 See, Nagaiya v Jayasekere (1927) 28 NLR 467.
10 The Securities and Exchange Commission of Sri Lanka Act, supra note 5, Section 32 (7).
11 Ibid., Section 32(6).
12 Ibid., Section 32(3).
13 Ibid., Sections 32 (1) and 32(2).
14 Ibid., Section 34(l)(a).
15 Ibid., Section 34(l)(b).
16 The Company Securities (Insider Dealing) Act (England) 1985.
17The Criminal Justice Act (England) 1993.
18 Ibid., Section 57(1).
19 Ibid, Section 57(2).
20 ‘Issuer of securities’ includes any body, whether incorporated or not and wherever it is incorporated or constituted (The Criminal Justice Act (England) 1993, Section 60(2)).
21 ‘Public sector bodies’, means any Government, local authority, or Central Bank of a Sovereign State wherever they are and any international organisation of which the UK or any other member of the European Union is a member (The Criminal Justice Act (England) 1993,60(3)).
22 Michael Ashe, ‘Who is an Insdier?’,The Fiduciary, the Insider and the Conflict: A Compendium of Essays, Edited by Rider and Ashe (1995) page 75 at page 77.
23 Council Directive (89/592/EEC) Article 2 and 2(1).
24 US v Winans 612 F Supp 827 (SDNY 1985) For Mr Winans’s own account, see R Foster Winans, Trading Secrets (Macmillan, London 1987). See also, US v Carpenter 791 F 2d 1024 (2d Cir 1986)
25 For example, the paper presented by Mr. N. Walmsley to the Bar Association for Commerce Finance and Industry and the Wilde Sapte Seminar on Insider Dealing, 29 April 1993
26 The Securities and Exchange Commission of Sri Lanka (Amendment) Act, 2003. The bill relating to this Act was published in the Gazette of the Democratic Socialist Republic of Sri Lanka Part II dated 18th October 2002 and was passed by Parliament on 28th January, 2003 (but had not been certified by the Speaker at the time of going to press).

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