Denial of purchase of shares and similar for wife & children

BobHants20

Hi. 

My new employer is imposing rules upon me post a merger, which due to the possibility of access to information which could be classed as insider trading (I actually do not have any access whatsoever), means that I need to attest that I will no longer purchase any shares anywhere in the world.

They are stating however that this attestation applies to my wife and children (who are still financially dependant).  This effectively prevent my wife purchasing shares, or, my children.

Is this legal?   Surely my wife is allowed to have financial privacy and could refuse to disclose this information.  This would render me unable to attest to the rules and I am worried could lead to disciplinary action.

"If" I had access to this kind of information, it would be different, but it seems that instead of classifying people in my old company appropriately, they are applying the maximum rules to us all.  Not everyone in my new company is classified that way - but it seems to be where they've put in the in the organisation.

Thanks in advance

LightFlare

This is most probably why:

https://www.bbc.co.uk/news/business-68379318.amp

elsien

I believe it stems from the Market Abuse Regulations where spouse and dependant children fall under the "connected person's" category.
Information in the FCA handbook but this may help to explain the background and what is/isn't allowed. 

COBS 11.7 Personal account dealing - FCA Handbook

Do your wife and children actually  want to buy shares or is this more about the principle?  You and anyone else it affects could get together to approach the company and argue that the rules are being applied too onerously?

Grumpy_chap

BobHants20 said:

Hi. 

My new employer is imposing rules upon me post a merger, which due to the possibility of access to information which could be classed as insider trading (I actually do not have any access whatsoever), means that I need to attest that I will no longer purchase any shares anywhere in the world.

They are stating however that this attestation applies to my wife and children (who are still financially dependant).  This effectively prevent my wife purchasing shares, or, my children.

Is this legal?   Surely my wife is allowed to have financial privacy and could refuse to disclose this information.  This would render me unable to attest to the rules and I am worried could lead to disciplinary action.

"If" I had access to this kind of information, it would be different, but it seems that instead of classifying people in my old company appropriately, they are applying the maximum rules to us all.  Not everyone in my new company is classified that way - but it seems to be where they've put in the in the organisation.

Thanks in advance

What exactly are you being required to attest to?
You state "no longer purchase any shares anywhere in the world"
Do you really mean any shares?
OR do you simply mean shares in the two directly associated companies with whom you are connected?

BobHants20

LightFlare said:

This is most probably why:

That's one of the reasons quoted - if I were that stupid, I'd expect the book to be thrown at me (I don't have knowledge anyway).

BobHants20

elsien said:

I believe it stems from the Market Abuse Regulations where spouse and dependant children fall under the "connected person's" category.
Information in the FCA handbook but this may help to explain the background and what is/isn't allowed. 

Do your wife and children actually  want to buy shares or is this more about the principle?  You and anyone else it affects could get together to approach the company and argue that the rules are being applied too onerously?

It's more about the principle.
That article says " ...implement and maintain adequate arrangements aimed at preventing the following activities in the case of any relevant person who is involved in activities that may give rise to a conflict of interest, or who has access to inside information"
I'm not involved in activities that may give rise to conflict of interest or has access to inside information.

Grumpy_chap said:

What exactly are you being required to attest to?
You state "no longer purchase any shares anywhere in the world"
Do you really mean any shares?
OR do you simply mean shares in the two directly associated companies with whom you are connected?

That I understand I can't buy shares and stocks (with some limited exceptions for completely managed funds under which I have no control).
Yes "any" shares for any listed company anywhere in the world.  If "Penguins 'r' us" were listed in South Georgia, I wouldn't be able to buy shares in them.   

BobHants20

Wondering if they are in breach of this:

COBS 11.7.6

For the purposes of this section, a person who is not:

1. (1) a director, partner or equivalent, manager or appointed representative (or, where applicable, a tied agent) of the firm; or
2. (2) a director, partner or equivalent, or manager of any appointed representative(or where applicable, a tied agent) of the firm;

will only be a relevant person to the extent that they are involved in the provision of designated investment business or collective portfolio management services.

I am not involved with the "provision of designated investment business or collective portfolio management services"

On-the-coast

“….  Yes "any" shares for any listed company anywhere in the world.  If "Penguins 'r' us" were listed in South Georgia, I wouldn't be able to buy shares in them.  …”
That doesn’t sound correct to me. Over what period
Is the restriction? What happens if the buyout drags on for years? What happens if you don’t “attest”?

I’d be wanting corporate paid-for legal advice before I signed up to that.  Has your company employed lawyers to create this draft who are competent in this field (and in this jurisdiction?)

BobHants20

On-the-coast said:

“….  Yes "any" shares for any listed company anywhere in the world.  If "Penguins 'r' us" were listed in South Georgia, I wouldn't be able to buy shares in them.  …”
That doesn’t sound correct to me. Over what period
Is the restriction? What happens if the buyout drags on for years? What happens if you don’t “attest”?

I’d be wanting corporate paid-for legal advice before I signed up to that.  Has your company employed lawyers to create this draft who are competent in this field (and in this jurisdiction?)

That's done and dusted.  Now in the new company as these rules have been sprung upon me (and others).  The new company has these rules and apply them to everyone in the division.  If I don't attest, I believe I could be dismissed.  The restriction on purchasing shares is for as long as I stay in that part of the company so I feel I have no choice to sign it.  

LightFlare

It's quite hard for anyone to give any definite answers without knowing further details, which understandably, you may not wish to divulge. 

Just because you work for a company in an area which gives you no direct knowledge of anything that could be commercially sensitive and/or profitable - that doesn't necessarily mean that you may not come into information via other none direct methods.

I hear and see all sorts of stuff in my day to day job that aren't within my department.

It's probably much easier for the company to have a blanket ban rather than a selective one

Grumpy_chap

BobHants20 said:

Yes "any" shares for any listed company anywhere in the world.  If "Penguins 'r' us" were listed in South Georgia, I wouldn't be able to buy shares in them.   

That seems particularly stringent.
From your initial post, I understood that this was linked with the transfer / merger of two businesses and constraints during that time seem prudent.  Obviously, only in relation to the involved parties, or possibly other potential bidders (which could include "Penguins 'r' us") so, even a time-constrained "any" company might be appropriate, even if it seems excessive.

Is your role / company one that advises on takeovers, mergers and acquisitions?  I can see that could create a scenario where individuals might come into conflict and exposed to insider trading risks.

Outside of that, the "any" company restriction seems excessive and possibly a mis-read.  If you have a habit of share trading, even on a small scale, it might be worth getting the rules checked by a Lawyer - first whether you have mis-interpreted - second whether it is permissible / enforceable restriction from the employer.