Question 5 ( 10 marks)

Outline and explain the potential legal liability for unethical use of a company's informationby:

(i)a current or past employee of the company; and (ii) any external stakeholder of a company such as a prospective investor in the company with no previous connection to the companyusing confidentialinformation not generally available to the public that they possess about the company to acquire securities in that company or communicate that information to others.

Remember, you may refer to any applicable sections listed below in your answers.

SECT 183

Use of information--civil obligations

Use of information--directors, other officers and employees

(1)A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a)gain an advantage for themselves or someone else; or

(b)cause detriment to the corporation.

Note 1:This duty continues after the person stops being an officer or employee of the corporation.

Note 2:This subsection is a civil penalty provision (see section 1317E).

(2)A person who is involved in a contravention of subsection (1) contravenes this subsection.

Note 2:This subsection is a civil penalty provision (see section 1317E).

CORPORATIONS ACT 2001 - SECT 1042A

inside information " means information in relation to which the following paragraphs are satisfied:

(a)the information is not generally available;

(b)if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products.

CORPORATIONS ACT 2001 - SECT 1043A

Prohibited conduct by person in possession of inside information

(1)Subject to this Subdivision, if:

(a)a person (the insider ) possesses inside information; and

(b)the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in section 1042A are satisfied in relation to the information;

the insider must not (whether as principal or agent):

(c)apply for, acquire, or dispose of, relevant financial products;or

(d)procure another person to apply for, acquire, or dispose of, relevant financial products, or enter into an agreement to apply for, acquire, or dispose of, relevantfinancial products.

(2)Subject to this Subdivision, if:

(a)a person (the insider ) possesses inside information; and

(b)the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in section 1042A are satisfied in relation to the information; and

(c)relevant financial products are able to be traded on a financial market operated in this jurisdiction;

the insider must not, directly or indirectly, communicate the information, or cause the information to be communicated, to another person if the insider knows, or ought reasonably to know, that the other person would or would be likely to:

(d)apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or

(e)procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products