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54 Seiten, Note: A-
Table of Acronyms and Abbreviations
II Why Regulate Insider Trading?
B The Classic View: Non-Regulation of Insider Trading
C The Rationales for Insider Trading Regulation
1 The fiduciary duty rationale
2 The misappropriation rationale
3 Market fairness
4 Market efficiency
III Insider Trading in New Zealand and Australia
A Backdrop of the Current Statutory Provisions in New Zealand
1 The pre Securities Markets Act era
2 The Securities Amendment Act of 1988
3 Policy shift of 2006
B Key Definitions: Insider & Inside Information
1 Reasonable person
2 Material effect on the price of listed securities
3 Generally available
C Prohibited Actions
D Criminal and Civil Liability
E Provisions Applicable on Private Companies
F Challenges in the Current Legal Framework
IV Insider Trading in the European Union
A Backdrop of the Current Statutory Provisions
B The Current Statutory Provisions
1 What is an insider?
2 What is inside information?
3 Prohibited actions
5 Provisions applicable on private companies
6 Comparison with New Zealand and Australia
7 Challenges in the current legal framework
ANNEX 1: Comparative Table of the insider trading provisions in New Zealand, Australia and the European Union
illustration not visible in this excerpt
Since the financial crisis in 2008, there is no doubt about the fact that the evolving financial markets are essential for economic growth, employment and prosperity. Those markets serve as financing means for the business world and consumers benefit from the availability of a wide range of financial products and the additional advantages that those markets entail (higher pensions and lower mortgage costs). However, if those financial markets want to continue to contribute both to economy and society, the promotion of a good, integer and transparent functioning of those markets is essential.1
The proper functioning of the financial markets is largely dependent on the confidence of investors in those markets. The fact that investors ‘must be placed on an equal footing’ is the underlying principle on which this confidence is based.2 Market participants must be assured to always have access to a minimum set of information before making their investment decisions.3 In this context, transparency plays an important role. The price of a financial instrument is always the result of the available financial information. And to have proper price formation, it is essential that all the stakeholders have equal access to the relevant information as much as possible.4
A lot of regulations have already been introduced in this area. Yet, the effectiveness of those regulations can be questioned. For example, directors can make use of certain non-public information to trade in securities. They abuse their superior knowledge and consequently other investors regard this as unfair trading. Due to those unfair practices, other potential investors will turn their back to the financial markets. Insider trading is likely to undermine the investors’ confidence in the market and may jeopardise the proper functioning of the market.5 Therefore insider trading should be prohibited. But in most cases, law enforcement authorities face difficulties in proving the offenses.6 Hence, insider trading is a social evil and remains difficult to combat.7
The battle against insider trading has been raging for over a hundred years now. The United States was in 1942 the first country to regulate insider conduct. Most countries started developing securities markets acts against insider trading in the 1980s and the 1990s. In New Zealand the first legal steps in this context were established in 1988. Since then, the New Zealand regulation on insider trading has been amended frequently along with a major policy shift in 2006. In 2006, the New Zealand rationale underlying the insider trading prohibition shifted from a fiduciary rationale to a market rationale. This major change has been transplanted from the Australian insider trading regime, where a major policy reform in 1991 determined this market-based approach.8
In the European Union (hereafter EU), the combat against insider conduct was first introduced in the French legislation in 1970. Other Member States followed suit and consequently the national insider trading prohibitions anticipated the European insider trading legislation in 1989. In 1989, the domestic prohibitions were replaced by the European initiative that aimed to coordinate the regulation of the insider conduct in order to improve market efficiency. After this first harmonising initiative, the proper functioning of the market was not yet a fact and the EU decided to enact the Market Abuse Directive (hereafter MAD) in 2003.9
This research essay will compare the current legislation on insider trading in New Zealand, Australia and the EU. In the end, it will be clear that the fundamental differences between the three jurisdictions remain off. For the comparison between New Zealand and Australia this is not really a surprise, since the current New Zealand insider trading regime is mainly based on the current Australian regime. When comparing those two jurisdictions to the current insider trading system within the EU, the same conclusion can be drawn; the European system is roughly the same as the system within New Zealand and Australia. Only few disparities can be found. This is actually not that peculiar, since the three insider trading systems are based on the same underlying rationale: market fairness and market efficiency.
Existence of insider trading law only matters if the laws are successfully enforced. Empirical evidence shows that countries with more stringent insider trading laws have a more informative stock price, a more liquid stock market and a more dispersed equity ownership. But the stringency of the laws is useless without effective enforcement of the rules. Only with good enforcement of the insider trading laws, the costs of the capital within the market will be reduced. Nonetheless, if effective enforcement is not achieved, the costs of compliance of the insider trading regulation will outweigh the benefits of it.10 New Zealand, Australia and the EU are faced with the problem of ineffective enforcement. Therefore, the question can be asked wether or not it is worth to prohibit this kind of behaviour.
The essay commences by defining and explaining the arguments pro and contra the regulation of insider trading in Chapter II. In the same chapter, the different underlying rationales of insider trading regulation will be discussed. Subsequently, Chapter III includes the insider trading system under both New Zealand and Australian law. The New Zealand current legal system will serve as a starting point within this chapter and references will be made to the Australian system. Within this chapter, the different features of the legal systems will be described: legal background, key definitions of ‘insider’ and ‘inside information’, the prohibited actions and the related exceptions, the liability, the system applicable to securities of private companies and the challenges of the current legislation. Each subchapter will conclude shortly on the differences between New Zealand and Australia. In Chapter IV the same approach will be used for the current insider trading regulation within the EU. Likewise, this chapter will finalise by making a comparison with the New Zealand and Australian legal system. Part V contains the final conclusion. This chapter will show which aspects from the European insider trading regulation can be used to improve the regulation within New Zealand and Australia. Finally, a short answer to the question whether or not it is worth regulating insider trading behaviour will be provided.
The key question in determining an adequate policy for insider trading is whether the use of insider knowledge ought to be prohibited and if answered affirmatively, to what extent. In order to accurately develop a regulatory response to insider trading, the complex interplay of economic, legal and ethical issues within the securities regulation debate needs to be taking into consideration.11
Before providing an appropriate response to the question of why should we regulate insider trading, it is crucial to define what insider trading is. At first blush, defining insider trading seems to be dependent on the legal jurisdiction in which the concept is being maintained. Although, disregarding the method a legal system eventually pursues, insider trading can be defined as “improper trading in securities on the basis of superior, i.e. non-public, knowledge of a certain company-related event that can influence the stock price of a company”.12 ‘Superior knowledge’ and ‘price sensitivity’ are the two core concepts that underpin the worldwide modern insider trading legislation.13 The precise legal interpretation of insider trading is dependent on the jurisdiction in which the insider trading occurs (infra).
Insider trading is generally associated with security dealings in large publicly listed companies14, rather than security dealings in smaller private companies15. However, for a shareholder of a private company the risk to commit a de facto ‘insider trade’ when selling shares to someone from the general investing public is very high, since there are more disparities in the access to information about the company compared to public companies. In contrast to public companies, private companies do not need to periodically report information to the general investing public and consequently there is much more superior knowledge among the shareholders of a private company.16 In most jurisdictions, the insider trading provisions only apply to trading activities of publicly listed companies. Yet, some jurisdictions such as New Zealand, Australia and some European countries extend their insider trading prohibitions for listed companies to privately held companies by providing certain fair dealing duties for directors (infra).17 This research essay will focus on the insider trading regime of publicly listed companies, although now and then a side reference to the regime applicable to private companies will be made.
There are two main arguments that have been brought up against the regulation of insider trading, namely information efficiency of prices and incentives on corporate insiders. Both arguments can be attributed to the early work of Henry G Manne (1966).18
There is a strong link between insider trading and market efficiency. A full and instant reflection of all the relevant available information is a prerequisite for an efficient financial market. Only in this market efficient scenario, market prices will serve as a reliable standard for the investment value of securities.19 A proposed takeover, undisclosed trading results and misrepresentation are just a few examples of information that has the potential to affect the value of a company’s securities.20 Insider trading is based on the latter kind of private information, which is crucial for the evaluation of a security price. By bringing the inside information into the open, insider trading will automatically move the stock price closer to its fundamental value and will therefore in turn increase the market efficiency.21 The effect of insider trading on the fundamental value of the securities is illustrated in the graphs below (Figure 1). Insider trading has a positive effect on the market efficiency since it speeds up the information signals to the market, which will ultimately result in information efficiency of prices.22
illustration not visible in this excerpt
Figure 1. The Impact of Insider Trading on Security Prices23
The second argument stresses the fact that insider trading creates incentives on corporate insiders to become more innovative since they have the opportunity to benefit from the value they create. Legalising insider trading will cause more creative, productive and risk-taking behaviour among the managers of the firm since they can cash in on their private information.24 In this view, permitting insider trading serves as a means of management compensation.
The fact that most countries have chosen to prohibit insider trading is somewhat difficult to reconcile with the classical view, which presumes that insider trading promotes economic efficiency.25
The regulation of insider trading has been reasoned in the literature on the basis of four potential rationales:
– fiduciary duty;
– market fairness; and
– market efficiency.
Both the fiduciary duty and misappropriation rationale were primarily developed in the United States corporate law26. Both rationales focus on inside information being misused by persons having a form of fiduciary or similar relationship respectively with either the company whose securities are traded or with the owner of the information.27 Therefore, the scope of those two rationales is rather limited. By contrast, the market fairness and market efficiency rationales emphasise the impact the use of inside information on the market, instead of focusing on the relationship with the company.
Insiders have access to confidential and potentially significant information, which creates an unfair advantage towards outsiders. Those insiders have the duty towards the company not to take advantage of their position by using their access to the company’s price sensitive information for personal gain, i.e. making a personal profit or avoiding a loss by trading in securities.28 This theory recognises certain insiders’ fiduciary duties towards the company, including the duty of confidentiality, the duty not to use corporate information for personal interest and the duty to evade conflicts of interests.29
The scope of this rationale is rather limited because of the prerequisite of the relationship with the company. People who fall within the scope of this rationale are inter alia corporate directors, officers and employees since they all owe duties towards the company. But for example an officer of a prospective bidder company - who possesses confidential information on the shares of the target company before the actual disclosure of the takeover bid - does not owe fiduciary duties towards the target company and can therefore not be prosecuted for insider trading under this rationale.30
The misappropriation of private information involves share trading while being in possession of confidential price-sensitive information. This latter information belongs to an entity to which the trading person owes a fiduciary duty, namely the duty of not misusing the proprietary rights over the corporate information since this can affect both the commercial reputation of the entity and the value of its securities.31
This rationale is an extension of the earlier developed fiduciary rationale, as the owner of the information does not necessarily equals the company issuing the securities.32 As with the fiduciary duty rationale, the scope of the misappropriation rationale is rather limited since it requires a sort of fiduciary relationship between the insider and the owner of the information.
The foundation of the market fairness theory is that insider trading is intrinsically unfair. All market participants should have equal access to information.33 Nonetheless, all participants bear a number of risks that are insurmountable and inherent on market trading practices. Such risks include inter alia better market analysing skills and thereby having the ability to respond more quickly to certain securities information when it is disclosed. The market fairness doctrine does not treat those inherent risks as information inequalities.34
The market fairness doctrine pursues to increase the public’s confidence in the market by penalising any person who uses superior information to gain an unfair advantage. In contrast to the fiduciary duty and misappropriation theory, there is no need to have a relationship with the owner of the information or with the issuing company to be considered as an insider. In other words, also outsiders that obtain significant information and use it unfairly can be prosecuted.35
According to the market efficiency rationale, insider trading damages the financial markets in a way that harms the investors’ confidence in the integrity of the securities market. Consequently, this will reduce the incentives of local and foreign investors to participate in a market that does not prohibit the use of asymmetric price-sensitive information. The reduced market participation may in turn affect the overall liquidity of financial markets and its fundraising in a destructive way.36
In line with the market fairness theory, the market efficiency approach defines the concept of insider in an extensive way, namely in its privileged relationship towards the public market.
The Australian insider trading law has served as a model for the current insider trading legislation in New Zealand. Therefore, this chapter will use the current New Zealand legislation as a starting point, with references to the current status quo of the topic under Australian law. Finally, each subchapter will conclude by summarising the disparities between both jurisdictions.
Before the enactment of the Securities Amendment Act of 1988 (hereafter SAA)37, there was no formal prohibition of insider trading in New Zealand.38 Instead, courts addressed the insider trading problem by way of applying the general fiduciary duties owed by a director-insider towards the company.39 There are two overarching fiduciary duties in the context of directors: the duty not to profit from a position of trust and the duty of loyalty.
According to the early common law, the directors of a company do not automatically owe fiduciary duties to the individual shareholders. Directors only owe their duties to the company.40 The first case in New Zealand to deal with this was Coleman v Myers.41 The Court of Appeal extended the directors’ fiduciary duties to the individual shareholders of the company in certain circumstances. The Court of Appeal in this case was influenced by the United States case law developments in this area.42
Prior to the SAA, the fiduciary regime applicable to the insider-directors of the company prevented them from withholding price-sensitive information to the people they were trading with.43
One year after the 1987 share market crash in New Zealand, the Securities Amendment Act of 1988 was drafted on the basis of a Securities Commission Report on insider trading.44 The underlying policy behind the SAA was a fiduciary rationale: persons having a relationship with the public issuer and holding inside information as a result from their connection to the company, owe a duty of confidentiality to the company and should not make a personal profit or avoid a loss by using the price-sensitive information when trading securities of the company.45
The SAA applied to persons who obtained information either because of their special relationship with the issuing company or because they received information in confidence from a person being in such a special relation. Only those two categories of persons could be classified as ‘insiders’. Information was categorised as ‘inside information’ when it was not available to the general public and it would or would be likely to affect materially the price of the securities if the information was available to the public.46
The Securities Amendment Act was amended and renamed in 2002 as the Securities Markets Act 1988 (hereafter SMA).47 The objective of the amendment was mainly to enhance the enforcement of the existing Act.48
The New Zealand insider trading regime prior to the policy shift of 2006, is generally regarded as having failed. In 2003, those reflections were finally taken into account by the government and resulted in a fundamental review of the insider trading law in New Zealand: The Ministry of Economic Development recommended to adopt a new regime on the basis of the market fairness and market efficiency rationale (supra).49
This major policy shift in 2006 resulted in the amendment of the existing SMA. The new legislation, namely the Securities Markets Act 2006 (hereafter SMA 2006), entered into force on 29 February 2008.50 While the concept of ‘inside information’ under the 2006 legislation sought to capture the same as the prior legislation, namely information that would have an impact on the securities’ price if it were available, the group of persons who are potentially liable as ‘insiders’ changed drastically under the new provisions (infra).51 The whole reform was closely modelled on the Australian insider trading legislation and was meant to contribute to the closer cooperation of New Zealand and Australian securities law.52
Prior to the mid 1970s, there was no prohibition on insider trading in Australia. Just as in New Zealand, the common law decision in Percival v Wright had authority within Australia and caused legal uncertainty about the question whether or not directors have fiduciary duties towards individual shareholders.53
In 1974, four Australian states prohibited insider trading by enacting a uniform Securities Industry Act. Five years later, all states established a cooperative companies and securities scheme and the Security Industry Act of 198054 was a principal part of this cooperative scheme.55 Section 128 of this Act prohibited insider trading. This provision required an insider to have a special connection to the company in order to be liable for insider trading. Such a special position could only arise when a person had a professional or business relationship with the company or if that person owed a substantial holding in the particular body corporate or in a related body corporate.56
Despite the enactment of those new provisions under the Securities Industry Act, there were very few prosecutions and none of them was successful.57 Therefore, the National Companies and Securities Commission appointed Professor Anisman in 1983 to report on the effectiveness of the insider trading legislation in Australia. One of the main conclusions of his report was that the term insider should be defined by reference to a wider range of relationships than the existing legislation provides.58 However, it was only with the publication of the Griffiths Committee Report in 1989 that the regulatory authorities got their wake up call.59 This report introduced a major policy shift among the Australian legal authorities. The underlying policy in the report was a market rationale instead of a fiduciary rationale. Accordingly, a new definition of the term ‘insider’ was proposed in the report. A connection to the company was no longer required for being an insider. Instead, the special correlation with the body corporate was replaced by the possession of information, namely material information that is not generally available to the market.60
After the publication of the Griffiths Report, the new policy objectives of market fairness, equal access and market efficiency were endorsed by the enactment of the Corporate Law Reform Act of 1991.61
The current statutory regime regulating inside trading can be found in Part 7.10 Division 3 of the Corporations Act of 2001 (hereafter Corporations Act).62 This current set of legislation is the result of the amendments made to the Australian insider trading laws under the Financial Services Reform Act of 2001.63 This Reform Act caused changes in the insider trading legislation in inter alia the nature of the relevant financial products, the prohibited activities and the remedies in case of a breach of the insider trading provisions.64
The current insider legislation is based on market efficiency and market fairness rationales in both New Zealand and Australia. This has particular consequences for the actual content of certain provisions of the insider trading regulation. An insider is no longer defined by his/her connection to the issuer or the owner of the information. An insider under New Zealand and Australian law can be anyone who is in possession of material information that is not generally available to the market. In this way, there is a bigger net of potential defendants than under a fiduciary-based regime. However, an extended definition of the notion insider might lead to overkill if the legislation does not provide the appropriate exceptions to exclude the subset of behaviour that the legislation does not intend to capture.65
Under the current New Zealand legislation, the ‘information insider’66 possesses material information relating to the public issuer that is not generally available to the market. Next to those two objective conditions, the law requires an additional subjective prerequisite: the insider knows or ought to know that the information is both material information and not generally available to the market.67 The SMA 2006 further defines both objective requirements (infra).
The term ‘insider’ is defined quite similar under the Australian Corporations Act. Section 1043A(1) requires that the insider is in possession of inside information and that the insider knows or ought to know that the two requirements of the definition of inside information in section 1042A (supra) are satisfied in relation to the information. Again, the definition comprises of an objective and subjective element.
According to the New Zealand law, the notion ‘material information’68 includes information that:
(a) a reasonable person would expect, if it were generally available to the market, to have a material effect on the price of listed securities; and
(b) relates to particular securities, a particular public issuer, or particular public issuers, rather than to securities generally or public issuers generally.69
Under the Australian provisions, ‘inside information’ is information that is (1) not generally available to the public and (2) if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of those securities.70
Additionally, the Australian law includes a detailed definition of what the term ‘information’ means: “matters of supposition and matter insufficiently definite to warrant being made known to the public; and matters relation to the intentions or likely intentions of a person”. But according to the preparatory works of the legislation, the term ‘information’ needs to be interpreted in an extensive way.71
1 F Kristen Misbruik van Voorwetenschap naar Europeesrecht: een onderzoek naar de grondslag en de werking van het Europees verbod van misbruik van voorwetenschap met aandacht voor de doorwerking van EG-richtlijnen in het strafrecht (Wolf Legal Publishers, Nijmegenm 2004).
2 Ibid at 191.
3 M J Kroeze Verantwoording aan Hans Beckman (Kluwer, Deventer, 2006) at 628.
4 E V Lishout “Handel met voorkennis: kennis van zaken” (My Lawyers Info door Monard-D’Hulst, 2009) at 1.
5 Council Directive (EC) No 89/592 on Coordinating Regulations on Insider Trading  OJ L 334/30-32 preamble.
6 Belga “Handel met voorkennis blijft ongestraft” (De Morgen, 8 april 2009).
7 P I Ferwerda Modern Beleggen voor Iedereen: Risico-beheersing in eigen oordeel (Ebuon, Delft, 2008) at 33.
8 Gordon R Walker and Andrew F Simpson ”Insider Conduct Regulation in New Zealand: Exploring the Enforcement Deficit” (2013) 2013 NZLR 521 at 522.
9 European Parliament and Council Directive (EC) No 2003/6 on Insider Dealing and Market Manipulation (Market Abuse)  OJ L 96/16-25 [hereafter MAD].
10 Sophie Anne Cunliffe “Materiality in Insider Trading: An obstacle to enforcement and compliance” (LLB (Hons) Dissertation, University of Otago, Dunedin, 2007) at 59.
11 Louise Longdin Insider Trading in Listed Companies – New Zealand’s Regulatory Response (Department of Economics University of Auckland, Paper presented to Midwinter Lecture Series 1994, Research Centre for Business Law, The University of Auckland, 8 July 1994).
12 P J Engelen and L Van Liedekerke ”Chapter 11. Insider Trading” in J R Boatright (ed.) Finance Ethics: Critical Issues in Theory and Practice (Wiley, New Jersey, 2010) at 199-222.
13 Charler Rickett and Ross Grantham Essays on insider trading and securities regulation (Brooker’s Ltd, Wellington, 1997).
14 A publicly listed company, in short a public company or listed company, is a company that offers its securities for sale to the general public, usually through stock exchange or through market makers that control the counter markets.
15 A privately held company, in short private company or unlisted company, is a company that does not offer its securities to the public for sale. Usually those private companies operate under less strict legal requirements than public companies (for example disclosure of financial information about the company).
16 OpenShares’s blog ”What is the risk of insider trading for private companies and their shareholders?” (28 July 2012) http://opensharesblog.wordpress.com/2012/07/28/insider-trading-and-private-companies/.
17 Geoff Caradus “S149 of the Companies Act: A potential trap for directors of privately held companies” Pitt & Moore Lawyers and Notaries Public
18 Henry G Manne Insider Trading and the Stock Market (The Free Press, New York, 1966).
19 B Malkiel ”Efficient market hypothesis” in P Newman and others “The New Palgrave Dictionary of Money and Finance” (1994) 32 J Econ Lit 667.
20 Basil M H Sharp Insider Trading – Economic Issues (Department of Economics University of Auckland, Paper presented to Midwinter Lecture Series 1994, Research Centre for Business Law, The University of Auckland, 8 July 1994) at 8.
21 P J Engelen and L Van Liedekerke ”Chapter 11. Insider Trading” in J R Boatright (ed.) Finance Ethics: Critical Issues in Theory and Practice (Wiley, New Jersey, 2010) at 202.
22 T Vermaelen ”Encouraging Information Disclosure” (1986) 31 TEM 435.
23 P J Engelen and L V Liedekerke ”The Ethics of Insider Trading Revised” (2007) 74 J Bus Ethics 497 at 498. Explanation: t = 0 displays a price-sensitive event. This event increases the fundamental value of the stock as shown in panel c. If no insider trading would occur, the stock price will remain at its pre-event value until the news is revealed to the public at moment t = 1 (panel a). By allowing insider trading, the informed trading at moment t = 0 by the insider sends a signal to the market that a value-sensitive event has occurred and the stock price will adjust accordingly to the solid line (1) (panel b). If the law prohibits inside trading, insiders will fear criminal charges and will therefore try to disguise their stock trading. Consequently, prices will only adjust according to the dashed line (2) (panel b) because the signals to the market will be less strong.
24 P J Engelen and L Van Liedekerke ”Chapter 11. Insider Trading” in J R Boatright (ed.) Finance Ethics: Critical Issues in Theory and Practice (Wiley, New Jersey, 2010) at 204.
25 Basil M H Sharp Insider Trading – Economic Issues (Department of Economics University of Auckland, Paper presented to Midwinter Lecture Series 1994, Research Centre for Business Law, The University of Auckland, 8 July 1994) at 12.
26 For the fiduciary duty rationale see Chiarella v United States 445 US 222 (1980) at 230 per Powell J and Dirks v SEC 463 US 646 (1983). For the misappropriation rationale see the dissenting judgement of Burger J in Chiarella v United States 445 US 222 (1980), US v Newman 644 F 2d 12 (1981) and Bateman Eichler Hill Richards Inc v Berner 472 US 299 (1985).
27 Cabinet Economic Development Committee Review of Securities Trading Law: Insider Trading (May 2002) at 2.
28 Ibid at 1.
29 Sophie Anne Cunliffe “Materiality in Insider Trading: An obstacle to enforcement and compliance” (LLB (Hons) Dissertation, University of Otago, Dunedin, 2007) at 3.
30 Companies and Securities Advisory Committee ”Insider Trading: Discussion Paper” (June 2001) at 13.
31 Ibid at 14.
32 Companies and Securities Advisory Committee ”Insider Trading: Discussion Paper” (June 2001) at 14.
33 John Farrar Corporate Governance: Theories, Principles and Practices (3th Edition, Oxford University Press, Melbourne, 2008) at 292.
34 Companies and Securities Advisory Committee ”Insider Trading: Discussion Paper” (June 2001) at 14.
35 Ian B Lee “Fairness and Insider Trading” (2002) 2002 Colum Bus L Rev 199.
36 Cabinet Economic Development Committee Review of Securities Trading Law: Insider Trading (May 2002) at 15.
37 Securities Amendment Act 1988 (SAA). This act was renamed on the first of December 2002 as the Securities Markets Act 1988.
38 Peter Ratner and Cathy Quin Insider Trading (New Zealand Law Society Seminar, 1990) at paragraph 1.1.
39 Phillip Anisman Insider Trading Legislation for Australia: An Outline of the Issues and Alternative (An Issues Paper prepared for the Working Party on Insider Trading of the National Companies and Securities Commission, 1986) at 1.
40 Percival v Wright 2 Ch 421.
41 Coleman v Myers 2 NZLR 225.
42 Strong v Repide 213 US 419 (1909).
43 Sophie Anne Cunliffe “Materiality in Insider Trading: An obstacle to enforcement and compliance” (LLB (Hons) Dissertation, University of Otago, Dunedin, 2007) at 18.
44 New Zealand Securities Commission Insider Trading: Report to the Minister of Justice (Insider Trading Report, Wellington, 1987).
45 Cabinet Economic Development Committee Review of Securities Trading Law: Insider Trading (May 2002) at 3.
46 Article 2 and 3 of the SAA define respectively the term ‘insider information’ and the term ‘insider.
47 For the convenience of this research paper, when intended to refer to the Securities Markets Act 1988 after the 2006 amendments, there will be reference to the following: The Securities Markets Act (2006 version) (SMA 2006).
48 Gordon R Walker and Andrew F Simpson ”Insider Conduct Regulation in New Zealand: Exploring the Enforcement Deficit” (2013) 2013 NZLR 521 at 531.
49 John Farrar and Susan Watson Company and Securities Law in New Zealand (2nd Edition, Brookers Ltd, Wellington, 2013) at 1146.
50 Securities Markets Act 2006.
51 Ibid at 1149.
52 Gordon R Walker and Andrew F Simpson ”Insider Conduct Regulation in New Zealand: Exploring the Enforcement Deficit” (2013) 2013 NZLR 521 at 524.
53 Roman Tomasic and Brendan Pentony Insider Trading in Australia: Summary and Recommendations (Criminology Research Council, 1989) at 6.
54 Securities Industry Act 1980.
55 Gregory Lyon and Jean J du Plessis The Law of Insider Trading in Australia (The Federation Press, Sydney, 2005) at 5.
56 Securities Industry Act 1980 s 128(8).
57 Alan Griffiths Fair Shares for All: Insider Trading in Australia (House of Representatives Standing Committee on Legal and Constitutional Affairs (‘Griffiths Committee’), Parliament of Australia, 1989) at 9.
58 Phillip Anisman Insider Trading Legislation for Australia: An Outline of the Issues and Alternative (An Issues Paper prepared for the Working Party on Insider Trading of the National Companies and Securities Commission, 1986) at 20-2.
59 Alan Griffiths Fair Shares for All: Insider Trading in Australia (House of Representatives Standing Committee on Legal and Constitutional Affairs (‘Griffiths Committee’), Parliament of Australia, 1989).
60 Gregory Lyon and Jean J du Plessis The Law of Insider Trading in Australia (The Federation Press, Sydney, 2005) at 8.
61 Corporate Law Reform Act 1991.
62 Corporations Act 2001.
63 Financial Services Reform Act 2001.
64 Juliette Overland Back to the Future? The Impact of Financial Services Reform on Insider Trading in Australia (Macquarie Law Working Paper No 2007-1, August 2007) at iii.
65 Cabinet Economic Development Committee Review of Securities Trading Law: Insider Trading (May 2002) at 5.
66 Under the New Zealand legislation the term ‘information insider’ is being used to refer to an insider.
67 Securities Markets Act 1988 (2006 version), s 8A.
68 Under the New Zealand legislation the term ‘material information’ is being used to refer to an inside information.
69 Securities Markets Act 1988 (2006 version), s 3.
70 Corporations Act, s 1032A.
71 Explanatory Memorandum, Corporations Legislation Amendment Bill 1991 at 90 , referring to Commissioner for Corporate Affairs v Green  VR 505.
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