Towards Better Deterrence of Securities Fraud: Promoting Consistency in Sentencing Insider Traders

39 Pages Posted: 30 Jul 2008

See all articles by Juliette Overland

Juliette Overland

Discipline of Business Law, Faculty of Economics & Business

Date Written: July 28, 2008

Abstract

With relatively few successful prosecutions and convictions for insider trading in Australia, the effectiveness and appropriateness of insider trading laws continue to be questioned. Insider trading is widely recognised as a factor which reduces investor confidence and undermines the integrity of securities markets. Consistent sentences for convicted insider traders could assist in deterring other potential offenders, and help to protect against this type of securities fraud. However, there are demonstrable inconsistencies in the sentences imposed - sentences vary from small fines, to three years imprisonment, with many variations in between. Some convicted insider traders are sentenced to full-time imprisonment, whilst others receive periodic detention or suspended sentences. Little explanation is available for such variation and inconsistency. This paper reviews all sentences imposed on convicted insider traders in Australia, and considers the wide range of penalties imposed. The factors considered most relevant to sentencing convicted insider traders are identified and analysed. Action is recommended to ensure greater consistency of sentences in the future, and thus assist in providing a greater deterrent and protective effect against insider trading.

Keywords: Insider trading, Insider dealing, Sentencing, Deterrence, Corporate Crime, Market misconduct, Australia

Suggested Citation

Overland, Juliette, Towards Better Deterrence of Securities Fraud: Promoting Consistency in Sentencing Insider Traders (July 28, 2008). Available at SSRN: https://ssrn.com/abstract=1181822 or http://dx.doi.org/10.2139/ssrn.1181822

Juliette Overland (Contact Author)

Discipline of Business Law, Faculty of Economics & Business ( email )

University of Sydney
NSW 2109, New South Wales
Australia

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