Suella Braverman MP may have committed the market abuse offence of unlawful disclosure when she leaked government “growth visas” plans to back bench MP John Hayes. The information may have been inside information meaning that Suella Braverman may have committed the offence by sharing it outside the government.
The Sun has reported that Suelle Braverman MP, the Home Secretary, during her previous stint in the role leaked details of a proposed “growth visa”. The visa programme reportedly would have allowed thousands of highly skilled IT professionals, scientists and sports stars to work in the UK. The visa plan was expected to increase economic growth and therefore affect the Office of Budget Responsibility (OBR) forecasts.
Suella Braverman MP is reported to have sent the information to backbench Conservative MP John Hayes. She had also intended to copy in John Hayes’ wife (who has been reported to work for him) but mistakenly sent it to a staff member of another Conservative MP.
Given the potential impact on the OBR forecasts, the information that Suella Braverman MP leaked may have been market sensitive and the Sun reports a source as saying “Suella has tried to play down the scale of the cock-up but it was incendiary, market sensitive information.” Labour have written to the Prime Minister asking for reassurance that no market sensitive information was leaked.
There are strict legal requirements around market sensitive or inside information. The Financial Conduct Authority’s (FCA’s) guidance on this for government departments states:
“Because of the work you do, your organisation may hold information that is confidential, non-public and valuable. If it was disclosed to the public, it could affect the market prices of shares and other financial instruments. If handled incorrectly, it could lead to disorderly markets. This would damage the integrity of the UK market, as well as creating the potential for market abuse, such as insider dealing. So, it is important that your organisation satisfies itself that it complies with the relevant provisions of MAR and takes steps to identify, secure and govern how it handles and discloses inside information.”
If the information leaked by Suella Braverman was market sensitive, then it is likely to have been inside information under the Market Abuse Regulation. The relevant definition of inside information under article 7(1)(a) of MAR is:
“Information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.
The Mirror has reported that “a person familiar with such matters told the Mirror that, if it had fallen into the wrong hands, it could have enabled “de facto insider trading”” and that “it’s very easy to bet on Sterling movements from your phone.”
The reference to “de facto” appears to be a reference to spot currency/FX trading not being within the scope of the definition of financial instruments used in the definition of inside information under MAR. While this is the case, FX futures and other listed FX derivatives do fall within the definition of financial instrument used in MAR. It seems likely that if the information disclosed by Suella Braverman MP would have significantly affected the price of Sterling then it would have similarly affected the price of related FX futures.
Article 10(1) of MAR includes the offence of unlawful disclosure of inside information:
“For the purposes of this Regulation, unlawful disclosure of inside information arises where a person possesses inside information and discloses that information to any other person, except where the disclosure is made in the normal exercise of an employment, a profession or duties.
This paragraph applies to any natural or legal person in the situations or circumstances referred to in Article 8(4).”
Unlawful disclosure of inside information is a civil offence which is punishable by an up to unlimited fine.
It is difficult to see the disclosure of the information by Suella Braverman MP could have been in the “normal exercise of an employment, a profession or duties”, given that even she has accepted it was a “technical infringement of the rules”.
It is important to note that the offence of unlawful disclosure of inside information can be committed regardless of whether the information is used for insider trading or not. For example, Ian Hannan was fined £450,000 by the FCA for the equivalent offence under the predecessor regime to MAR for sending two emails containing inside information where it was not part of the FCA’s case that “Mr Hannam deliberately set out to commit market abuse or that Mr Hannam lacked honesty or integrity”.
There is a serious question to answer whether Suella Braverman MP committed the offence of unlawful disclosure when she leaked the proposed growth visa plans to John Hayes MP.
Omar Salem is a solicitor specializing in financial regulation. He writes in a personal capacity.