(1) The tipping provisions generally apply to anyone in a “special relationship” with a reporting issuer. [FN 12] Persons in a special relationship include, but are not limited to
(a) insiders as defined under securities legislation;
(b) directors, officers and employees;
(c) persons engaging in professional or business activities for or on behalf of the company; and
(d) anyone (a “tippee”) who learns of material information from someone that the tippee knows or should know is a person in a special relationship with the company.
(2) The “special relationship” definition is broad. The tipping prohibition is not limited to communications made by senior management, investor relations professionals and others who regularly communicate with analysts, institutional investors and market professionals. The tipping prohibition applies, for example, to unauthorized disclosures by non-management employees.
(3) There is a potentially infinite chain of tippees who are caught by the prohibitions against tipping and insider trading. Because tippees are themselves considered to be in a special relationship with a reporting issuer, material information may be third or fourth hand and still be subject to the prohibitions.
(4) Because the “special relationship” definition is so broad, it is important that companies establish corporate disclosure policies and clearly define who within the company has responsibility for corporate communications.
FN 12 The tipping prohibition in Québec applies to insiders and persons listed in section 189 of the Québec Securities Act. Québec securities legislation extends the prohibition to communications by persons having privileged information that, to their knowledge, was disclosed by an insider, affiliate, associate or by any other person having acquired privileged information in the course of his relations with the reporting issuer and by persons having acquired privileged information that these persons know to be such.