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Financial Markets Conduct Act 2013

Dealing in financial products on markets - Insider trading - Defences

258: Inside information obtained by independent research and analysis

You could also call this:

"Getting inside information by doing your own research is a valid defence."

Illustration for Financial Markets Conduct Act 2013

If you are accused of breaking the rules in section 241 or 242 of the Financial Markets Conduct Act 2013, you have a defence if you got the inside information by doing your own research and analysis. This means you did not get the information directly or indirectly from the company involved. You must have done planned investigation to gain new knowledge and understanding, which is what is meant by research in this case.

If you are accused of breaking the rules in section 243, you also have a defence if you gave advice or encouragement based on inside information that you got from your own research and analysis, and not from the company involved.

When the law talks about research, it means you did a planned investigation to learn something new, which is how you got the inside information.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091353.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rulesBusiness > Fair trading
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257: Absence of knowledge of trading, or

"It's not an offence if you didn't know you were trading financial products and couldn't be expected to know."

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259: Equal information, or

"You're not in trouble if others already knew the secret information before a deal happened."

Part 5Dealing in financial products on markets
Insider trading: Defences

258Inside information obtained by independent research and analysis

  1. In any proceeding against a person (A) for contravention of section 241 or 242, it is a defence if the inside information was obtained by research and analysis and was not obtained directly or indirectly from the listed issuer concerned.

  2. In any proceeding against a person (A) for contravention of section 243, it is a defence if A encouraged or advised on the basis of inside information that was obtained by research and analysis and that was not obtained directly or indirectly from the listed issuer concerned.

  3. In subsections (1) and (2), research means planned investigation undertaken to gain new knowledge and understanding.

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