Question 2 (20 marks)

Daisy is the Company Secretary of Green Ltd, a listed company that distributes European skincare products in Hong Kong and mainland China. At 6pm on Thursday afternoon, one of the skincare companies, Yellow Ltd, informed Green Ltd that it would terminate Green Ltds exclusive distributorship of its products in Hong Kong and mainland China with immediate effect. In accordance with the Listing Rules, Daisy prepared an announcement about the termination which will be published on Friday morning.

When Daisy arrived home that night she received a phone call from her sister, Alice. During their conversation Alice told Daisy that her boyfriend Billy held shares in Green Ltd. Daisy told Alice about the upcoming public announcement. Alice immediately called Billy and told him about what Daisy told her. Billy sold all his shares in Green Ltd before the public announcement was made. The share price of Green Ltd dropped about 25% on Friday after Green Ltd announced the news to the public.

Required:

Critically assess if the conduct of Daisy, Alice and Billy constitutes insider dealing.

[Total for Question 2: 20 marks, limit your answer to no more than 500 words]