Tag Archives: England

Crossing the wall? How companies can reveal inside information without contravening Market Abuse Regulations

When I hear the term “insider trading,” I tend to think of stories that make the headlines: Enron, Martha Stewart, and SAC Group. But what if you’re working for a company listed on the stock market, and need to speak to someone – say, your company’s lawyer – about an upcoming merger, profit warning, or mass redundancy?

It is not unusual for a public company to disclose important market moving information – such as advance warnings of earnings results – to analysts, lawyers, or selected investors before making the same information available to the general public.

Market moving information is a term used in stock market investing, defined as information that would cause any reasonable investor to make a buy or sell decision.

In regulatory parlance, when a public company reveals market moving information to a select group of people before it discloses that information to all investors at the same time, this is known as selective disclosure, or “wall crossing”. The problem with selective disclosure is that it creates an uneven playing field for investors, giving some people the opportunity to profit from market moving information before others.

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Transparency in control

Companies trading on the London Stock Exchange’s Alternative Investment Market are no longer exempt from publishing details of significant shareholders.

It is widely accepted that London is the money laundering capital of the world, with the property market being the primary avenue for the laundering of £100 billion ($128b USD) of illicit money each year (The Guardian, 2016).

To combat money laundering, tax evasion, terrorism financing, and fraud, both national and international organisations have introduced tougher, more wide-reaching legislation over the last few years.  One such statute came into full effect this week here in the United Kingdom: Directive (EU) 2015/849, or the fourth anti-money laundering directive (“AML4”).

Breaking it down
Complementary to the AML4 legislation is the Persons with Significant Control (PSC) regime. The new law requires all companies – private and public – to keep a recorded register of the persons (including legal entities) who can control or otherwise influence a company. A PSC, popularly referred to as “beneficial owners,” is someone with more than a 25 per cent holding of the shares in a company.

The rationale is that making public this information will prevent fraud and tax evasion through the use of overseas holding structures, which often mask the true ownership of a company or the property it owns.

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Magna Carta and the Forgotten Forest Charter

This weekend, my fiancé and I went to the British Library for the Magna Carta exhibition. As we went early in the morning, at one point we were completely alone in the gallery, our noses pressed up against the glass to view an original manuscript in full detail! It was inspiring to see such a famous artefact in person, especially as a trainee lawyer.

However, the document I was left thinking about wasn’t Magna Carta at all, but its rather unknown companion, Carta de Foresta, or the Charter of the Forest. What is this Charter, and might it have even greater significance to British History and Legal Philosophy than Magna Carta itself? 

New Forest has heaths instead of mountains, and is actually the most extensive area of heathland remaining in Europe.

In the Middle Ages, ​”​forest​ ​land”​ included fields, heathland, and villages, as well as wooded areas. William the Conqueror created the first “Royal Forest” in 1079, naming it Nova Foresta, or “New Forest.” In so doing, he also introduced the first Forest Laws to protect both wildlife and the plants that such animals depended upon for food and shelter.

While Royal Forests may sound like an enviro-friendly idea, in actuality these were restrictive hunting grounds for the King’s use only. Before 1079, land had been held in common: it was in essence owned by everyone and yet no-one. This allowed ordinary people (“commoners”) access to hunt or forage for food and gather fallen timber. But the introduction of Royal Forest laws established severe, and sometimes fatal, consequences for living off of the land. For disturbing a deer your punishment might be having an eye or hand removed. Poaching deer – even if only to feed your hungry family – could warrant the death penalty.

The New Forest is home to fallow, roe, sika and red deer.

Successive Norman Kings continued to protect more and more land under the Crown, thereby expanding their wealth and abusive powers. By the 13th century, almost half of the English territory was considered Royal Forest! This system of Royal Forest creation proved to be a lucrative source of income. Firstly, not only had ordinary people lost permission to utilise forest land, but very rarely did they understand what their few remaining rights were. As such, the fines and penalties they paid went straight into the Royal purse. Secondly, the King could also sell licences to the nobility, allowing them a certain quota for hunting and logging.

In June of 1215, King John was forced by a group of rebellious Barons to accept the “Articles of the Barons,” a peace treaty which increased the Baron’s powers while limiting those of the King.

Several clauses aimed to reform Forest Law, promising to “disafforest” the Royal Forests created by King John. This didn’t mean that the trees would be chopped down: it simply meant the land would be removed from the King’s ownership. As a result, the Barons regained the ability to hunt and utilise the land without fear of punishment.

This example of the 1225 Forest Charter, one of three surviving originals, is sealed by King Henry III.

However, various features of the Articles of the Barons continued to be contentious, and further debate led to its reissue in 1217. It was at this point named Magna Carta, and published concurrently with a separate Forest Charter. While Magna Carta spoke mainly of the rights of the Barons, Carta de Foresta also addressed the rights of ordinary people and restored traditional rights.

Subsequently, cases of Forest Law were adjudicated in courts rather than by royal representatives. Officers of the Crown could no longer arrest someone for poaching without evidence, and the death penalty for such a crime was abolished. Gradually, strenuous efforts from local communities led to further reductions in the size of the Royal Forests.

As somewhat of a proto-Socialist treatise of coordinated restrictions upon individual privatisation, the Forest Charter allowed ordinary English people to reassert their liberties and livelihoods vis-à-vis the Crown. I believe this is incredibly significant in the history of legal and political theory. And impressively, the Charter remained in force until 1971, when the Wild Creatures and Forest Laws Act was passed – and the specialised Forest Courts still exist in New Forest and the Forest of Dean.

You can read the full text of Carta de Foresta – it’s neither long nor complicated!