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Market Abuse Traditional Finance

Unlawful Disclosure

Disclosing inside information outside the normal course of duties, a market abuse offence distinct from insider dealing.

1 Introduction

Unlawful disclosure of inside information, sometimes called improper disclosure, is a standalone market abuse offence under Article 10 of the EU Market Abuse Regulation (MAR). It occurs when a person who possesses inside information discloses it to another person outside the normal exercise of their employment, profession or duties. Crucially, the disclosure is itself the offence: it is unlawful whether or not the recipient, often called a tippee, goes on to trade. The information can then travel down a chain of recipients, with each onward disclosure capable of being a fresh breach.

Art. 10

MAR provision defining the offence

No trade

Disclosure alone can complete the offence

Chains

Tippee networks extend liability outward

2 Interactive Information Chain Walkthrough

Phase: Information Contained

Information Chain

Share Price Around Announcement

Step 1 - Information Contained: A corporate insider holds material inside information ahead of an announcement. While it stays within the proper exercise of their duties, there is no breach and the share price drifts sideways.

3 Detailed Analysis

Unlawful Disclosure vs. Insider Dealing

Unlawful Disclosure

The act of passing inside information to another person outside the normal exercise of duties. The communication itself completes the offence, regardless of whether anyone trades. Liability can attach to the discloser at the moment the words are spoken.

Insider Dealing

The act of trading, or attempting to trade, on the basis of inside information, or recommending that another do so. It requires a dealing element. A tippee who buys ahead of news commits insider dealing, distinct from the discloser who tipped them.

Detection Methodology

Detection usually begins with the price and volume move at the announcement, then works backwards. Surveillance teams reconstruct who held the inside information, build a timeline of contacts, and look for trading by people connected to insiders ahead of the news. Communication records such as emails, chat logs, and phone metadata are central, because the offence can exist purely in a conversation. Network analysis links insiders to tippees and onward recipients, while statistical tests assess whether pre-announcement trading was unusually well timed. Insider lists maintained by issuers under MAR give investigators a starting roster of who was meant to know.

Red Flags

  • Trading by friends, family, or associates of insiders shortly before a market announcement
  • Contact or messages between an insider and an outside party just before a price-sensitive event
  • Clusters of unrelated accounts taking the same position in a stock ahead of news
  • Inside information appearing in communications outside the recipient's normal duties or need to know

Related Fraud Types

Insider Trading

Trading securities based on material, non-public information in breach of a fiduciary duty or other relationship of trust.

Market Manipulation

Artificially inflating or deflating the price of a security or otherwise influencing market behavior for personal gain.

Front-Running

Executing orders on a security ahead of a large pending order that will predictably move the price.