The Protected Interests in the Private Right of Action for Insider Trading: A Comparative Perspective

Abstract

This article argues that in creating a private right of action for insider trading, the legislature needs to communicate clearly the nature of the protected interests by addressing first, the causation issue, and secondly, how loss should be measured. To the extent that the wrong of insider trading is characterised as trading on or communicating sensitive non-public information, it is not obvious how private interests are substantially affected. In legislating for a private right of action, therefore, it is inadequate merely to provide that damages may be sought by any private party who has suffered losses. Through an examination of the insider trading laws of the US, Australia and Singapore, the author analyses the doctrinal problems that arise when the protected interest is not clearly identified. At the same time, the author explores the feasibility of characterising the protected interest as one against unfair use of information, and considers its use as the theoretical construct by which to frame the questions of causation and loss in the context of Australia and Singapore.