Insider Trading: Addressing the Continuing Problems of Proof

29 Pages Posted: 21 Jun 2018

Date Written: January 1, 2009


Despite the introduction of the option of civil penalty proceedings and a number of successful civil and criminal prosecutions by the Australian securities regulator (ASIC) in recent years, insider trading continues to pose challenges for law enforcement. Proof of communication of material price sensitive information from tipper to trader remains elusive in many cases due to the absence of witnesses prepared to attest to such communications. This article looks at possible reforms that might be considered to encourage such witnesses to come forward and otherwise obtain evidence of such communications. These include consideration of rewards and bounties as well as the availability of leniency and immunity to witnesses or accomplices in both civil and criminal matters. In considering this the article also looks at the issue of relative culpability between tippers and tippees which involves consideration of the rationale for prohibition of insider trading. The implications of the abandonment of the fiduciary rationale for prohibition become particularly relevant to the relative culpability of tippers and tippees. The article also considers the question of telephone taps, the role of ASX and the encouragement of private civil proceedings on the basis that they may produce evidence that the regulator can also use.

Keywords: insider trading, proof in litigation, securities law, law enforcement

JEL Classification: K14, K22, K41, K42

Suggested Citation

Duffy, Michael, Insider Trading: Addressing the Continuing Problems of Proof (January 1, 2009). Australian Journal of Corporate Law Vol. 23, 2009, Available at SSRN:

Michael Duffy (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800

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