2021 BRN Discussion, page-2473

Time for some insider trading education in my opinion.

I have extracted the following paragraph from a paper dealing with the vexed question under Australian Law as to when a corporation as opposed to an individual may be considered to have engaged in Insider Trading in breach of the law. To do so the author has had to deal in depth with what the law is in relation to individuals. It is not often in my opinion that this is done in such straight forward detail as the basic principles under pinning Insider Trading law in Australia as it applies to individuals are well understood by lawyers and academics. As a result it is difficult to find accessible papers for a diverse audience such as we have here as they are usually being tailored to interesting little points that arise in trials and appeals.

" Unlike many overseas jurisdictions, Australian insider trading laws maintain an ‘information-connection’, rather than a ‘person-connection’. That is, there is no requirement for any relationship to exist between the alleged insider trader and the company or entity in whose securities the alleged insider trader is suspected of trading (or procuring the trading of shares). It is irrelevant if the alleged insider trader has no connection with the relevant entity – the fact that they trade in such shares whilst possessing inside information is the only connection required"

https://www.researchonline.mq.edu.au/vital/access/services/Download/mq:900/SOURCE1?view=true
So it is clear in my opinion that if you as a holder of shares in Brainchip believe that there are the following things in play:

1. Well north of 100 Non Disclosure Agreements with interested companies around the world;
2. An EAP with NASA;
3. A joint development agreement with Vorago;
4. An EAP with Valeo;
5. An EAP with Ford;
6. A partnership with Magik-Eye;
7. A relationship of some type with NaNose;
8. A relationship of some type with Noisey Gut Belt;
9. An unconditional commercial sale of IP to Renesas;
10. Further undisclosed EAP customers;
11. Scientific and engineering developments/innovations the subject of trade secrets, undisclosed incomplete unfiled patent applications, complete and filed but undisclosed patent applications;
12. Further undisclosed future research that could be significant;
13. Details of the precise wording of the contract with Renesas that will be commercially significant and give a proper indication of the future income that this unconditional commercial contract will produce for Brainchip; and
14. Information be it oral or written that has passed between Renesas, Valeo, Ford, NASA, Magik-Eye, NaNose, Noisey Gut Belt, Vorago concerning the potential use cases being explored by these companies for AKIDA technology which the Board and the former CEO of Brainchip have been privy too,

which has yet to be disclosed to the market and yourself and if so disclosed would be material to the market and yourself then there is relevant insider knowledge.

So that if the former CEO, Peter van der Made and Anil Mankar traded in the shares of Brainchip now or into the foreseeable future they would do so while in possession of inside information and in consequence commit the serious criminal offence of Insider Trading. As the above extract makes clear it is the knowledge not the relationship which creates the offence. The CEO either by resignation or termination does not break the nexus between his knowledge and the law against Insider Trading.

There is in the explanatory document from the ASX posted by Dolci yesterday an exception but that exemption requires a disclosure by the individual in writing to the Board setting out the reasons for the need to sell and written approval from the Board with reasons as to why they have approved the sale. This process could in due course allow the former CEO to dispose of his shares to purchase his options but as the ASX explanatory note makes clear it will still constitute insider trading but if conducted in the manner described will likely not be the subject of sanction. The document warns that the individual notwithstanding having received this written permission is still Insider Trading and should carefully consider the timing and related issues.

So all the ideas about selling by these three individuals is in my opinion simply baseless unwarranted speculation.

As for Peter van der Made and Anil Mankar and the Robert Mitro as has been pointed out they presently have just over 25% of the share capital and as such have the power of life and death over any proposal to take over the company. As a matter of logic and common sense ask yourself if you were them at the pointy end of Brainchip's evolution onto the world stage would you give up that advantage and thereby throw away your ability to ensure that if an approach were to occur that you received the maximum potential benefit. They have walked a very long way together to get to this point to throw away such an advantage for a few shekels in the heat of the moment. When the price went to 97 cents not one share left their possession.

Finally of the 13. listed items above you personally do not have to believe all of them to create the situation where these individuals and others associated with the company possess insider information any one of the 13. points will do. The reality is that you can even have a negative view point about every one of the 13. points ever leading to anything positive for the shareholders and Brainchip and it is still insider trading if the fact that they are all failures is known to anyone individual alone and trading takes place.

Now this is just my anonymous opinion on a social media site so read the article if you have any interest and DYOR.