Note · Securities & Capital Markets
Insider trading frameworks beyond the policy document
Most listed companies have a code. Fewer have a monitoring process that would demonstrate compliance if it were examined.
6 min read
A code of conduct on insider trading is a necessary document and an insufficient control. What is examined after the fact is the operation of the framework: how unpublished price-sensitive information was identified, when the trading window closed, who was designated, and whether pre-clearance was sought and recorded.
The four records that matter
- A structured digital record of the sharing of price-sensitive information.
- A designated-person list maintained as people join and leave, not annually.
- Trading-window closures tied to events rather than to a calendar.
- Pre-clearance approvals with the reasoning recorded.
The practical failure mode
The framework typically fails not at the level of the senior management team, which is well advised, but one layer below it - in finance, investor relations, and the offices of external advisers. The remedy is a designation process that follows the information rather than the org chart.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Boards should consult qualified legal counsel for company-specific guidance.