Liability for Insider Trading: Learning Lessons from Australia

Abstract

Insider trading is acknowledged internationally as a significant threat to the integrity of securities markets and a major legal issue in both public and private law arenas. However, there is not uniformity in the approaches taken to combat insider trading, or the laws which regulate this form of securities fraud. Australia, in particular, has insider trading laws which differ in several significant respects to those of other jurisdictions. The points of regulatory difference have been highlighted in the recent case brought unsuccessfully against the global investment bank, Citigroup, by the Australian regulator, the Australian Securities and Investments Commission. Although this case addresses Australian law on insider trading, it is of global significance not only because it involved once of the world's largest investment banks, because it is one of the very few cases to consider claims of insider trading against a corporation. This paper reviews the effect of the judgment on the insider trading laws of Australia and compares and contrasts the legal positions with international regulation in this complex area of corporate law.

Keywords: Insider trading, Insider dealing, ASIC, Citigroup, Market misconduct, Australia, proprietary trading, investment banking