Can I Be Accused of Insider Dealing Because a Family Friend Traded Shares?

What Counts as Unlawfully Disclosing Inside Information?

Unlawful disclosure involves sharing confidential, price-sensitive information outside the proper performance of your professional duties. You do not necessarily have to trade shares yourself or encourage someone else to trade for a disclosure allegation to arise.

Under UK market abuse rules, inside information generally means specific information that is not public and could significantly affect the price of relevant investments if disclosed. For example, an upcoming acquisition involving a listed company may be inside information before the transaction is announced.

Sharing that information with colleagues or advisers who need it to work on the transaction may be legitimate. However, revealing confidential details to a family friend during a social conversation may be unlawful if the disclosure falls outside your professional duties.

Even an indirect comment could be relevant if it conveyed information that was not publicly available.

Could a casual conversation be treated as a tip-off?

Yes, a casual remark may raise concerns if it reveals confidential information about a transaction. The circumstances and what was actually communicated are important. For example, mentioning that a particular company is about to be acquired could amount to a disclosure even if you did not explicitly advise anyone to buy shares.

However, simply having a conversation with someone who later trades does not establish that confidential information was shared. Investigators must examine the content of any communication, not just whether contact occurred.

A criminal allegation and a regulatory market abuse allegation may also involve different requirements and consequences.

How Do Investigators Try to Prove Who Leaked Inside Information?

Investigators usually examine who had access to confidential information, when the shares were traded and whether there is evidence linking the two. They may rely on communications, transaction records and the sequence of events. 

For example, the FCA may identify everyone who received information about a proposed acquisition before its announcement.

Investigators may then examine relevant phone records, emails, messages and document access logs to establish whether information could have been passed to the trader. They may also review the friend’s trading history, including the size of the investment and whether it was unusual compared with their previous activity.

A large purchase shortly before an announcement may attract attention, particularly where the trader has a personal connection to someone working on the deal. 

However, access to confidential documents and contact with the trader are not, by themselves, proof of a leak.

Investigators must consider what the available evidence establishes about the alleged disclosure.

Can investigators rely on circumstantial evidence?

Investigators can rely on circumstances such as timing, communications and unusual trading patterns, even without a message explicitly revealing the deal. 

However, a call does not establish what was discussed.

The strength of a case depends on the evidence as a whole, including whether there are credible explanations for the contact and the trade.

A solicitor can assess whether investigators have evidence of an actual disclosure or are drawing conclusions from circumstances that may have another explanation.

Could My Family Friend’s Trading Have Been a Coincidence?

Someone may trade shares for reasons unrelated to information obtained from you, even where the timing appears suspicious. The important question is whether the trade was influenced by unlawfully disclosed inside information.

A person might invest because of public market announcements, published research, wider industry developments or an existing investment strategy. 

Their previous trading activity may help explain whether the purchase was unusual. Records showing earlier interest in the company or sector may also be relevant. 

However, an apparently legitimate investment history does not automatically resolve an allegation. Investigators will consider the available evidence, including the relationship between the trader and anyone who had access to confidential information.

You should not contact the friend to agree on an explanation of the trade or attempt to influence their account. Your own solicitor can advise on what evidence may help establish that no information was passed between you.

What Evidence Can Help Show I Did Not Disclose Confidential Information?

Communications records, deal access logs and evidence of compliance with your firm’s confidentiality procedures may help establish your position.

These records can show what information you had, when you had it and whether there is evidence of disclosure.

Relevant material may include:

• Emails and messages: Communications with the family friend during the period under investigation.
• Telephone records: Dates and times of contact that may help explain or challenge the alleged sequence of events.
• Deal access records: Information showing when you received, reviewed or worked on confidential transaction documents.
• Compliance records: Evidence that you followed confidentiality procedures and restrictions on sharing information.
• Diary and meeting records: Documents that may help establish your activities during relevant periods.

For example, records showing that a friend purchased shares before you received particular confidential information may be significant. 

Similarly, evidence that conversations concerned unrelated personal matters may help explain contact that investigators consider suspicious. 

Your independent solicitor can assess how these records relate to the allegations and identify whether further evidence should be obtained.

Should I preserve work emails and confidential deal documents?

Yes, relevant records should be preserved, but you should not remove, forward or download confidential client documents without appropriate authority.

Deal records may belong to your firm or its clients and may be subject to confidentiality obligations. Do not delete messages, alter files or attempt to change access records. You should also avoid using personal email accounts or devices to transfer sensitive transaction information. 

Ask your independent solicitor how relevant records can be preserved and obtained through appropriate channels.

This can help protect potentially important evidence without creating additional confidentiality or employment concerns.

Should I Get My Own Solicitor Instead of Relying on My Firm’s Lawyers?

Yes, independent legal representation is strongly advisable where you personally face an allegation of leaking inside information. Your firm’s lawyers may be protecting the firm’s interests, which are not necessarily identical to yours.

The firm may be concerned about its client relationships, confidentiality controls and regulatory responsibilities. 

You, however, may be facing an individual investigation into your professional conduct and possible criminal liability. For example, the firm may need to establish whether confidential information was handled properly across the transaction team.

Even where the firm supports you, its legal advisers may not be acting for you personally. An independently instructed solicitor can advise solely on your interests and help you understand how to respond to questions from the firm, FCA or police.

Can I speak confidentially to my own solicitor?

Communications with an independently instructed solicitor for legal advice will generally be confidential and may be protected by legal professional privilege. However, the protection depends on the nature and purpose of the communication.

You should clarify whom the solicitor represents and whether the advice is being provided to you personally. 

Do not assume that conversations with the firm’s internal legal team are privileged on your behalf. Similarly, do not assume that every discussion with management or compliance staff will remain confidential.

A solicitor can explain how privilege, professional confidentiality and any investigation-related obligations apply. Given the sensitivity of an insider dealing allegation, it is sensible to agree on secure communication arrangements from the outset.

What Are the Possible Consequences If Investigators Believe I Disclosed Inside Information?

Unlawfully disclosing inside information can lead to serious criminal or regulatory consequences, including financial penalties and, in criminal cases, imprisonment. The outcome depends on the conduct alleged and which legal process is pursued.

Criminal insider dealing offences can carry a maximum sentence of ten years’ imprisonment. The FCA can also take civil enforcement action for breaches of market abuse rules, which may result in substantial financial penalties. 

Separate professional disciplinary action may also be considered where a solicitor’s conduct raises regulatory concerns. 

For someone working in corporate law, the potential professional impact may be as significant as the financial or criminal consequences. 

This makes it important to address the allegation carefully from the beginning, particularly where the evidence involves confidential client matters and the firm’s own interests.

What Should I Do If the FCA, Police or My Firm Contacts Me About a Suspected Leak?

Identify the nature of the enquiry, preserve relevant evidence and obtain independent advice before giving a detailed account. You should also ensure that you do not interfere with the investigation or breach professional obligations.

If you receive a formal notice or request for information, check any response deadlines and seek advice promptly. Do not ignore a lawful request for information or assume that all requests can be refused.

If your firm begins an internal investigation, ask what process is being followed and whether you are being interviewed as a witness or as someone whose conduct is under review. Preserve your own communications and records relating to the relevant period. 

Do not delete messages, change documents or contact the family friend to discuss what they should tell investigators. Avoid sharing details of the allegations with colleagues or other people who do not need to know.

A solicitor can assess the requests made by investigators and advise how to respond while protecting your legal position and complying with any applicable duties.

Should I tell my firm’s compliance team before speaking to my own solicitor?

You should obtain independent advice promptly, particularly if the firm is investigating your conduct or considering a regulatory report. However, you must still comply with any applicable reporting, cooperation and confidentiality obligations. Your firm may have legitimate reasons to investigate how confidential information was handled.

At the same time, its interests may differ from yours. An independent solicitor can advise on the appropriate sequence of communications, including whether and how to speak with management, compliance staff or the SRA.

The aim is to respond accurately and cooperate where required without making unnecessary statements or compromising your individual position.

How Can an Insider Dealing Defence Solicitor Help Protect My Career and Reputation?

An independent insider dealing defence solicitor can assess the suspected leak, review the evidence and advise on how to respond to the FCA, police and your firm. They can also help address professional regulatory concerns arising from the same allegation.

For example, a solicitor may examine the timeline of the transaction, when you accessed confidential information and whether communications support the allegation that you passed it to your family friend. 

They can consider alternative explanations for the trading and identify what additional evidence may be relevant. Where formal requests are made, they can advise on responding appropriately while respecting client confidentiality and legal privilege. 

They may also coordinate advice concerning the SRA, employment matters and any potential criminal proceedings.

For a practising solicitor accused of leaking deal information, independent representation can be particularly valuable because the investigation may affect several aspects of professional life at once.