Nim is a director of Avarice Ltd, a successful multimedia and marketing company. Avarice Ltd is keen to grow its business and wants to take over another successful marketing business, Marketers Rule Ltd. This is discussed at a board meeting and it is decided to attempt the takeover in three months. As it happens, Nim's sister Ann is an executive director of Marketers Rule Ltd, a fact he does not disclose to the board of Avarice Ltd. Nim informs Ann of the intended takeover and also buys 200,000 shares at $20 a share. Ann also increases her own shareholding, but prior to the takeover, resigns as a director of Marketers Rule Ltd to set up her own marketing business. Ann takes with her a wonderful new software marketing package she has developed while working as a director at Marketers Rule Ltd.

Avarice Ltd proceeds with the takeover, at which point the share price of Marketers Rule Ltd increases to $100 a share. Nim and Ann sell their shares in the takeover and make a large profit. Subsequently, Avarice Ltd and Marketers Rule Ltd discover Nim and Ann's conduct and demand an explanation.

What are the possible consequences of their conduct?