Some Aspects of Insider Trading - Has the Securities Services Act 36 of 2004 Gone too Far?

Abstract

This article examines the prohibition of insider trading in South African under the Securities Services Act 36 of 2004. It compares the insider trading prohibitions which existed under the Insider Trading Act 135 of 1998 with those of the Securities Services Act 36 of 2004. This articles examines the extension of the insider trading legislation to juristic persons; the Chinese Wall defence; the offences of insider trading; the defences to insider trading; the application of the insider trading provisions to foreign markets and the penalties imposed for committing an offence of insider trading. This article argues that while the Securities Services Act is an improvement on the Insider Trading Act, it has failed to address some of the uncertainties of the Insider Trading Act and has introduced additional uncertainties into South Africa’s law on insider trading. This article concludes that in its aim to increase confidence in the South African financial markets the Securities Services Act has considerably tightened the regulation of insider trading in South Africa, but may in doing so have gone too far in regulating the offence of insider trading. This article also considers whether the regulation of insider trading in South Africa may be made more effective.