The Insider Trading "Possession versus Use" Debate: An International Analysis

Abstract

This article aims to examine the "possession versus use" debate in the context of insider trading from an international perspective. It appears that the debate has so far largely occurred in the US with little research examining the positions of other jurisdictions. This article therefore conducts a comparative analysis of the legal responses to the issue in various jurisdictions, including the US, the UK, Australia and Canada. Indeed, the US debate traditionally lists only two approaches, namely the use standard and the possession standard. In contrast, at the international level, the treatment of the issue can be more appropriately categorized into four different approaches, including the strict possession, the strict use, the modified use and the modified possession standards. After a careful analysis of these four standards, it is submitted that the modified possession standard is most appropriate.

Keywords: Insider trading, possession, use, subjective elements

JEL Classification: K22, K33