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There was a time in Britain when even senior representatives of the financial services industry were prepared to be quoted in the press as expressing doubts as to whether there was anything intrinsically wrong with directors and other corporate insiders taking advantage of their better knowledge about their companies in their own investment dealings. Indeed, some even went so far as to say that this was both proper and natural. True it is that, in Britain or for that much in continental Europe, there are few, even among the groves of academia, that would have advanced the theories justifying insider dealing that Professor Henry Manne so clearly articulated in ‘Insider Trading and the Stock Market’. Nonetheless, in what was then the leading book on the law and practice of the stock market, the authors, a leading Queen's Counsel and an eminent stockbroker, expressed the view in 1972 that a stockbroker who learnt even privileged information should not allow this to operate to the detriment of his client. Having said this, Sir Winston Churchill complained that it was defamatory to assert that advantage had been taken of ‘inside information’ during the so‐called Marconi scandal in 1911, and there are comments in a report to the House of Commons by special commissioners as early as November 1696 roundly criticising promoters of over‐valued stock selling out, in the entrepreneurial fashion eloquently advocated by Professor Manne, on the basis of their privileged knowledge and position. Thus, discussion of the pros and cons of insider dealing, at least in Britain, has tended to be emotional rather than based on economic or even pseudo‐economic analysis of empirical data. Even the surveys that have been conducted on attitudes to the practice would hardly impress a statistician.

This article examines the implementation of the Insider Dealing Directive, the aim of which is European harmonisation in the UK and in Germany, two European countries with completely different backgrounds on this issue.

The purpose of this paper is to examine whether insider dealing is fraud from the perspective of Islam.

The paper uses analogy (qiyas) of the injunctions in the Qur'an and Sunnah and critical analysis of literature on Islam.

The paper finds that insider dealing is fraud (taghrir) in Islam and the defrauded party has the option to rescind the transaction for fraud (khiyar al‐tadlis) as well as for latent defect (khiyar al‐‘aib).

The paper is practical as a source of reference in legislating laws relating to insider dealing particularly where Shari'ah is the principal source of law.

The paper presents a novel attempt in establishing that insider dealing is fraud from the perspective of Islam.

This paper discusses New Zealand's attempt to deal with insider trading by statutory means. New Zealand's attempt is of particular interest since it has two features which distinguish it from other jurisdictions. The first feature is the decision to reject the criminalisation of insider trading and to instead rely upon civil enforcement of insider trading alone. The second feature is the failure to provide a state agency with powers to take action (whether civil or criminal) against insider trading. The New Zealand legislation, the Securities Amendment Act 1988 (‘the Act’), was put in place after the stockmarket crash of 1987 in response to outcries against perceived abuses in the market. The Act has been in force for seven years, yet no case involving allegations of insider trading has been taken to completion. The basis of the insider trading regime is private enforcement which, in the light of its failure to provide effective remedies and control, needs to be reviewed.

Enforcement as a concept imports compulsion to comply with a particular norm. Of course, the nature of enforcement might vary considerably with the norm in question or society within which action is desired. Professor Gower, in his ‘Review of Investor Protection’, expressed the view that a rule that could not be or was not enforced brought the system, within which that rule was supposed to operate, into disrepute. Whether this is true or not may be a matter for debate. Most systems of control envisage rules that in practical terms are unenforceable, but that are expected to have a normative or educational effect. Such functions, in the context of securities regulation, may be thought to be of some significance. Thus, the fact that simply because a rule cannot either in its terms or in practice be sanctioned by a predictable and determinate action intended to promote compliance, does not necessarily undermine that rule let alone the system within which it exists. To assume without more that a rule that cannot be enforced is not a legal rule, or to be precise a rule of law, while no doubt appealing enough to the positivist school of jurisprudence, is simplistic and outdated. Furthermore, in the context of the sort of economic regulation that we are discussing, whether a rule is characterised as one of law or not may or may not have significance. While there is a problem with determining the appropriate degree of interface between rules bearing differing qualities, purely in terms of achieving a defined regulatory objective it might well be that a rule which is not law in the formal sense of having been promulgated by an authority with legislative power, promotes a satisfactory degree of compliance. Therefore, many of the rules that pertained prior to the creation of the regime of regulation under the Financial Services Act 1986 were essentially non‐legal in the sense that they did not carry determinate sanctions ordained by a legal process consequent upon a violation and were not promulgated by an authority with legislative power. However, to dismiss them because they were unenforceable at law would give a very false picture of the efficacy of what was for many years a satisfactory regulatory structure. Even today, although the interrelationships of legal and non‐legal rules is very much more complex, it is still the case that significant areas of regulation have been left to non‐legal authorities.

German law has recently taken an important and long‐overdue step in the battle against dishonesty on the stock markets by implementing EC directives 88/627 and 89/592, respectively imposing a duty of publication of certain information and prohibiting insider dealing. The resulting law, however, is not a panacea for all evils, in that these provisions do not cover the case of deliberate deception through the promulgation of false facts on the stock exchange, leading to a false influence on price fixing and a consequent loss to third parties. The author wishes to show, however, that German law already has a perfectly adequate provision in the criminal code to deal with such instances, although he is not aware of any cases where this provision has been used to convict an individual for causing losses to investors in this way. Several shortcomings can be seen to be responsible for this. Firstly, the ability of the prosecution to handle such cases must be doubted. Secondly, German criminal law is not capable of dealing with cases where this type of interference with market trends was planned and established by teams. Thirdly, the relevant provisions of the German criminal code is only designed to deal with individuals and not with legal entities.

The purpose of this chapter is to establish whether director trades provide information to investors about the future prospects of the company they form part of and thus reduce the information asymmetry beyond what is already conveyed in the financial statements.

Director Dealings were dealt with as an investment strategy by looking at past transactions of directors executed between January 2005 and December 2014 on the Malta Stock Exchange (MSE) and evaluating whether there was an increase in returns for investors who copy director trades. The study focused on whether short-term abnormal returns for up to 12 months after the transaction date, being either a buy or a sale, were made by directors in Malta when trading in their own companies.

The results show that in the short-term period of up to 12 months after the transaction date, Maltese directors do transmit information to the market both when they purchase shares in their own companies and also when they sell shares. The interesting fact about the study is that in Malta sale transactions are more valuable to the outsiders than purchase transactions. Apart from this, the results also show that some companies which are listed on the MSE are more indicative as to their future performance than others. It was ultimately concluded that even though there are informational asymmetries between directors in a company and outsiders, an outsider cannot trade solely by following director trades. The implications of the findings are discussed.

This study attempts to determine the level of significance that each insider trade has on the Maltese market, what each director trade conveys to the said market and if these trades are valuable to the outside investors even though such investors do not have knowledge of the grounds upon which the directors trade.

The purpose of this paper is to assess the FSA's recent, allegedly soft approach toward insider trading and compare it with current approaches in the USA, France, and Germany

Discusses reasons for the FSA's current approach, including its emphasis on “principles‐based” regulation and its policy against being an “enforcement‐led” organization and, for comparison, provides the perpectives of Dechert lawyers on current enforcement trends in the USA, France and Germany.

The prosecution of insider trading is one of the best examples of principles‐based regulation in the USA, which suggests that a debate concerning whether the FSA should adopt “rules” proscribing insider trading before embarking on a campaign of vigorous prosecution may be largely irrelevant if the will exists to address such activity. This article was originally published internally by Dechert LLP in April 2007 and has since been updated for the Journal of Investment Compliance.

The paper assesses the FSA's recent approach toward insider trading in the UK.

The rise in business activities coupled with free trade liberalisation across countries has entailed an increase in securities transaction as well as insider trading (IT). In fact, IT is characterised by the influence and usage of some prior knowledge concerning sensitive information of a corporate body which results in a financial benefit to the insider trader. The practice of IT is not only unethical but also illegal and this statement is witnessed by the mushrooming of laws across the globe categorising IT as an offence. However, the type of punishment varies in different countries depending on various factors. Consequently, the purpose of this paper is to assess the adequacy and efficiency of IT laws in the context of a developing country being Mauritius.

To achieve the research objective, the Mauritian laws on IT were compared with the corresponding laws of some developed countries like the USA and the UK. As such, a qualitative research method was adopted. In particular, the black letter approach was used to examine the relevant laws of Mauritius, UK and USA on IT. A comparative analysis was conducted concerning IT laws for each country with the view of suggesting recommendations for Mauritian stakeholders to adopt to enhance the existing legal and regulatory framework on IT.

It was found that Mauritian IT laws are largely inspired from both the US and UK corresponding legislation. However, Mauritian laws need to be strengthened by imposing some more severe penalties in terms of fines and terms of imprisonment like the USA has established. The Mauritian Financial Services Commission as the regulator also needs to play a more active role in disseminating particularities of IT laws, offences and penalties to the civil society at large.

At present, this study will be among the first academic writings on the efficiency of IT laws in Mauritius and also, because existing literature is quite scarce on assessing the adequacy of IT legislation in developing countries, this research aims at filling in the gap in literature. The study is carried out with the aim of combining a large amount of empirical, theoretical and factual information that can be of use to various stakeholders and not only to academics.

This study aims to examine the deterrent effect of the Market Abuse Directive (MAD) introduced in the European Union in 2003. The purpose is to evaluate whether the Directive has resulted in significant changes in pre-bid stock price run-ups observed in mergers and acquisitions within the Portuguese, Spanish and Greek stock markets.

The study analyzes a sample of 199 mergers and acquisitions in the aforementioned stock markets. The magnitude of pre-bid stock price run-ups is investigated as an indicator of illegal insider trading. The effects of the MAD, toehold positions of bidders and industry similarity between firms involved in the deals are assessed using statistical analysis.

The study’s findings indicate that the MAD has been ineffective in deterring investors from trading on non-public information. Pre-announcement price run-ups remain significant, suggesting ongoing illegal insider trading practices. Additionally, the research reveals that pre-bid stock price run-ups tend to be lower when bidders have established a larger toehold position in the target and when the firms involved in the deal belong to the same industry.

This study contributes to the existing literature by providing empirical evidence on the ineffectiveness of the MAD in deterring illegal insider trading. The findings highlight the limitations of increasing penalties without an effective monitoring system in place. Furthermore, the study identifies additional factors, such as toehold positions and industry similarity, that influence the magnitude of pre-announcement price run-ups in mergers and acquisitions.