Inside Dealing – The New Law: Part V of the Criminal Justice Act 1993
| Date | 01 May 1994 |
| Published date | 01 May 1994 |
| Author | Keith Wortherspoon |
| DOI | http://doi.org/10.1111/j.1468-2230.1994.tb01949.x |
LEGISLATION
Insider Dealing
-
The New Law: Part
V
of
the
Criminal Justice Act
1993
Keith
Wotherspoon
*
The purpose of
this
article is to examine the impact of the Criminal Justice Act
1993
(‘the
1993
Act’) on the future prosecution of insider dealing offences in the
UK.
Part
V
of
the
1993
Act represents the fruits of the Government’s endeavours
to translate the requirements of the EC Directive on Insider Dealing (‘the
Directive’) into domestic law.’ The Directive was unanimously adopted in
November
19892
as a ‘minimum standards’ measure allowing Member States to
introduce more stringent controls than the Directive
require^.^
Ministers took
credit for playing an ‘active’ and ‘leading’ role in shaping the final measure4
which left the determination of penalties for infringement of domestic insider
dealing controls entirely at the discretion of Member States provided these
penalties were ‘sufficient to promote compliance.
’5
The Minister for Corporate
Affairs had earlier indicated during the negotiation process that there would be ‘no
need for us to contemplate legislating or enacting this [Directive] by way of civil
rather than criminal sanctions.’6 This stance was reaffirmed in December
1989
when the Department of Trade and Industry (DTI) published its consultation
document indicating that the Directive was to be implemented simply by amending
the existing criminal law before the due date of
1
June
1992.’
Five months later,
however, the Trade and Industry Select Committee8 unanimously recommended
the complementary introduction of new civil remedies which could be made
available to a regulatory body as a way of strengthening the widely perceived
weakness of the civil law in relation to the victims of insider dealing.9 The DTI
*Faculty of Law, University of Aberdeen.
I should like to thank Professor D.J. Cusine, Professor A.D.M. Forte, Mr I. MacNeil and the anonymous
reader for their helpful comments on a draft
of
this paper. The responsibility for the views here expressed is
mine alone.
1
Council Directive Coordinating Regulations on Insider Dealing
89/592
EEC,
OJ
No L
334/30.
2
On the long gestation process preceding the Directive’s adoption,
see
Tridimas, ‘Insider Trading:
European Harmonisation and National Law Reform’
(1991)
40
ICLQ
919,
at
920.
A similar ‘record
pregnancy’ was noted by an Opposition spokesman in
1979
when the introduction of criminal sanctions
for insider dealing was
fdy
nearing the statute book in this country: House of Commons Standing
Committee A, Eleventh Sitting,
6
December
1979,
col
566.
3
Art6.
4
See
Earl Ferrers in HL Deb vol
539,
col
1347 (3
November
1992)
and the Home Secretary (Mr
Kenneth Clarke MP) in HC Deb vol
222,
col
869 (14
April
1993).
5
Art
13.
6
See Mr Francis Maude MP, HC Deb vol
154,
col662
(12
June
1989).
The Minister was, however,
prepared to concede that there might be a case ‘quite independently’ of the Directive for considering
‘whether some sort of civil sanctions provide a better and more flexible means of enforcing the law.’
7
See DTI.
Z%e
Law
on
Insia’er Tradina:
A
Consultative
Document
(December
1989).
am
2.12.
8
See Trade
&
Industry Committee, ThGd Report,
Company Investigations
(2
May
19!k):
HC
36,
paras
158- 169.
~~ ~
~~.
9
See
eg Gower,
Principles
of
Modem Company
Law
(London: Sweet
&
Maxwell, 5th
ed,
1992)
pp
640-642;
Hannigan,
Insider Dealing
(London: Kluwer,
1988)
ch
5.
The view that insider dealing
leaves identifiable victims in its wake is not universally shared: see eg Justice,
Insia’er Trading
(London,
1972)
paras
33-34;
Law Society’s Standing Committee on Company Law, Memorandum
on the Proposal for a Directive Coordinating Regulations on Insider Trading (London, September
1987)
p
11.
419
0
The
Modern Law Review Limited
1994
(MLR
573,
May). Published by Blackwell Publishers.
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