Jonathan Spotty (Spotty) is Chief Executive Officer of Ajax Cloud Services Ltd, a firm specialising in providing cloud services to companies operating in the financial services sector. On 15 October the Chief Information Officer (CIO) of Ajax Cloud Services Ltd tells Spotty that there has been a major breach of cyber security involving 100,000 valuable clients, whereby personal identifying information involving millions of data points has been stolen. Spotty tells the CIO to keep this information secret. On 16 October Spotty sells 20,000 of his shares in Ajax Cloud Services Ltd on the New York Stock Exchange (NYSE) making a profit of $US10 million. Spotty also encourages his closest friend Max Collim to sell his share in Ajax Cloud Services Ltd because the market is going to hear some very bad news about his company. Also on 16 October Max Collim sells his shares making a profit of $US 5 million. On 17 October Ajax Cloud Services Ltd informs the NYSE that there has been a major cyber security breach at the company. Consequently, the market price of Ajax Cloud Services Ltd falls by 30%.

In the above case scenario, answer the following questions:

1. Does the conduct of Spotty and/or Max Collim amount to the offence of insider trading under US federal securities law?
2. If the conduct of Spotty happened in Australia, i.e. Ajax Cloud Services Ltd was an Australian company trading on the ASX, would the conduct also amount to insider trading under Australian law?

In discussing the above case scenario, refer to court judgments and legislation in the United States and the legislation in Australia.