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 the public and private law arenas. However, there is no uniformity in the approaches that are 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 that was brought unsuccessfully against a 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 one of the world's largest investment banks, but also 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 judgement on the insider trading laws of Australia, compares and contrasts the legal positions with international regulation in this complex area of corporate law and concludes by highlighting the particular relevance of insider trading to private law.