Question 1

Question 1 Hugo is a non-executive hoard director of Carter Ltd {'Carter'}, a public company listed on the Australian Stock Exchange (ASK). The company markets a perJme for women. The perlme is very pepuiar and sales have been almost doubling every six months. Willie reading the board papers sent to him for discussion at the next board of directors' meeting, he comes across a report from Carter's research department that one of the ingredients used in the manufacture of the perfume has been linked in the US with a rare form of illness. He quickly realises that the company may be forced to discontinue the sale of the perfume. He piaces an order to seii 213,000 Carter shares at the market price of $2.50 per share. His order is matched by the AS): automated trading system with an order by another client who has instructed her broker to buy the same number of shares at that price. Foilowing the board of directors' meeting, the managing director of Carter calls a press conference to announce that the hugeiy popular perfume will be withdrawn from sale due to concerns about one of its ingredients. Investors react negatively to the announcement and Carter's share price falls to $2.00 per share. Advise Hugo whether he is iiabie for insider trading and, if iiable, the legal consequences that he would face