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Release of insider information

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Dicken was the financial controller of a publicly listed company, Good Men Investment Co. Ltd.  He was finalizing the share prospectus of his company.  Lawrence was Dicken’s best friend.  Their friendship dated back when they were in the same university and worked for the same CPA firm immediately after graduation.


Having a chronic illness which required expensive long-term treatment, Lawrence had also been suffering from financial difficulties.  Dicken felt very sorry about Lawrence’s situation.  Knowing that there would be a sharp rise of Good Men’s shares, Dicken intended to drop a hint to Lawrence to acquire the shares of Good Men from the market before the public announcement.  Dicken understood his action was insider dealing but he convinced himself that he was in good intention.  He thought that this case could be an exception considering the sad plight of Lawrence.


Should Dicken help Lawrence? Are there any other alternatives?

Case Analysis

The following factors should be taken into consideration when identifying viable alternatives and choosing the best course of action:


  1. Any violation to his professional, industry specific or company code of conduct?
  2. Is it against the Law?
  3. Does it correspond with his self-values such as honesty, compassion and responsibility?
  4. Can he disclose his decision to others openly and honestly without misgivings?


Dicken could refer to the ETHICS PLUS ethical decision making model for solving his dilemma.


As far as professional conduct is concerned, Dicken, as a professional accountant, should observe the fundamental principles of integrity, confidentiality and professional behavior when carrying out his duties as a professional accountant. He might have breached the Code of Ethics for Professional Accountants for using confidential information for personal gain or for the financial gain of others. 


For legal compliance, Dicken might breach the Securities and Futures Ordinance if he, as a senior management of the listed company, had intentionally, recklessly or negligently disclosed unpublished price-sensitive information to Lawrence for the latter to deal in the company’s shares.


Dicken was regarded as an insider under the law because he was a person who, being the financial controller of Good Men Investment Co. Ltd, had access to and knowledge of certain information relating to the company which the public did not have and would have an impact on the price of the company’s shares. 

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