Financial Crime World

Title: Insider Trading in the Seychelles: Understanding the Legal and Illegally Confined Activities

Insider trading, a term often associated with clandestine deals and illicit financial gain, isn’t always illegal. Seychelles, the tropical island nation, recognizes two distinct categories of insider trading: the legal and the illegal.

Legal insider trading, also known as insider buying or selling, refers to the activities of corporate insiders, such as officers, directors, and employees, trading in their own companies’ securities. Seychelles law permits insiders to buy and sell securities, as long as they disclose their transactions promptly and accurately to the Seychelles Financial Services Authority (FSA).

  • Reporting Obligations: Insiders are required to submit Forms 3, 5, and 5 to report their transactions (available on the FSA’s Fast Answers databank).
  • Internal Reporting Process: Unlike their US counterparts, Seychelles insiders report directly to the FSA, ensuring a streamlined reporting process.

Illegal Insider Trading: A Betrayal of Trust

The darker side of insider trading involves activities that breach a fiduciary duty or other relationships of trust and confidence while in possession of material, non-public information (MNPI) about a security.

According to the Seychelles Securities Act, 2007, illegal insider trading includes the following violations:

  1. Tipping of MNPI: Sharing confidential information with another person with the intention they use it for securities trading.
  2. Securities trading by the person tipped: The individual who receives the tipped information and trades on it is also held liable for insider trading violations.
  3. Misappropriation of MNPI: Unlawful obtaining of confidential information, often through deceit, trickery, or breach of confidentiality, and using that information for securities trading purposes.

Maintaining Fairness and Integrity

To maintain investor confidence in the fairness and integrity of the Seychelles financial markets, the FSA has enforced insider trading regulations, focusing on the detection, investigation, and sanctioning of insider trading violations both in Seychelles and abroad.