Transnational financial crime

Regulation of Insider Trading

Abstract

Insider trading has over the last 30 years become an increasingly well regulated form of financial securities crime . The Australian insider trading regime is based upon the principles of ensuring fairness and efficiency within the share market . A vocal group of advocates of deregulation have consistently argued that insider trading should be de criminalized as the practice actually improves the efficiency of equity markets and is a victimless crime . However this argues that the larger public interest is maintained by an effort to restrict insider

trading . Insider trading damages confidence in the transparency and efficiency of stock market transactions . Such confidence is the basis upon which equity market are built and allows them to most efficiently allocate resources . Whilst the current Australian insider trading regime has had modest success the principles upon which it is based are sound and suitable for further action and development

Introduction

Traditionally insider trading has been seen as a harmless victimless crime committed by the economic elites of society . The practice has largely been beyond the reach of the law and prosecutions have been rare . As such the normative framework within insider trading has been accepted has to be changed in addition to stricter legislation and enforcement mechanisms . As long as insider trading is ill defined and socially acceptable it will remain a part of the financial services industry . The argument that insider trading reflects prices more accurately in an open market does not hold true as , such transactions...