(MENAFN - Arab News) The Capital Market Authority (CMA) reiterated in a new statement on Monday that trading based on insider information in listed companies remains prohibited.
It cited Capital Market Law (CML) and relevant regulations in reinforcing its position on the issue.
Article 50 of the CML states: "Any person who obtains, through family, business or contractual relationship, inside information (insider) is prohibited from directly or indirectly trading in the security related to such information, or to disclose such information to another person with the expectation that such person will trade in such security."
Insider information means information obtained by the insider, which is not available to the general public, has not been disclosed, and such information is of the type that a normal person would realize that in view of the nature and content of this information, its release and availability would have a material effect on the price or value of a security related to such information, and the insider knows that such information is not generally available and that, if it were available, it would have a material effect on the price or value of such security.
According to Article 5 of CMA's Market Conduct Regulations, an insider is prohibited from disclosing any inside information to any other person when he knows or should have known that it is possible that such other person might trade in the security related to the inside information.
In addition, a person who is not an insider is prohibited from disclosing to any other person any inside information obtained from an insider, when he knows or should have known that it is possible that such other person to whom the disclosure has been made may trade in the security related to the inside information.
As part of its investor awareness efforts to help investors avoid violations, CMA issued a Guidebook of Examples of some violations of the Capital Market Law and its implementing regulations.
During the first half of 2013, one case related to insider trading was suspected and CMA prepared its indictment and raised the case to the Committee for the Resolution of Securities Disputes.
CMA urges board of directors and those interested in the market to read the CMA's rules and regulations as well as its investor awareness guidebooks which are available on its website.