Now a study estimates that up to 1 per cent of transactions on the local market could be based on inside knowledge. Neal Woolrich reports.
NEAL WOOLRICH: Rene Rivkin remains Australia's most high-profile convicted inside trader. The late stockbroker was sentenced to nine months jail in 2003 for improperly dealing in 50,000 Qantas shares. Despite suspicions that insider trading is rife, successful prosecutions are rare.
STUART WILSON, AUSTRALIAN SHAREHOLDERS' ASSOC: From a retail, investors point of view, the insider trading laws are very important. They ensure a level playing field for investors and it means that people that don't perceive that others with insider knowledge are taking advantage and making profits at the expense of them.
NEAL WOOLRICH: A preliminary study by the capital markets research centre estimates that up to 1 in 100 share trades could be based on inside knowledge and while equity markets are moving at a rapid base, reform of Australia's insider trading law is not.
STUART WILSON: I think with insider trading it's a perennial problem. So it's going to be around for years. I think that rushing the job is never going to be the best thing to do here. I think we need to make sure that it's done properly.
NEAL WOOLRICH: A report in 2003 by the Corporations and Market Advisory Committee made 38 recommendations on improving the law. The Federal Government has now endorsed most of those but is also seeking submissions on key issues, including the definition of inside information, what constitutes generally available information and how the rules should apply in a buyback or placement.
STUART WILSON: The problem with the lack of insider trading convictions is both a combination of the very difficult circumstances that are required in order to prove it and also perhaps a lack of vigour amongst the regulator to actively pursue these all the way to the end.
NEAL WOOLRICH: Stuart Wilson says the stock exchange has a robust system of detection and surveillance that's identified numerous examples of abnormal share price movement before a public announcement. But this has translated into very few convictions, feeding the perception that the vast majority of illegal trades go unpunished.
Copyright Australian Broadcasting Corporation
Posted March 12th, 2007 by Armen Hareyan
