A Discussion of Some Aspects of the Regimes for the Regulation of Insider Dealing in South Africa and the United States of America

Abstract

AbstractGlobal regulators acknowledge the negative economic impact linked to insider dealing and have devised diverse regulatory frameworks aimed at minimizing its prevalence. Although their strategies differ, policy-makers realise that, with the inevitable internationalization of securities markets, the probability of cross-border insider trading escalates. With a view to providing a platform for regulatory re-examination and reform, this article discusses the divergent approaches that the United States and South Africa have adopted to counter the challenge of pervasive insider dealing. A paradox manifested with the US experience is that, while its theoretical prohibition of insider dealing is widely criticized as inadequate and inconsistent, robust enforcement has nonetheless led to strong institutions and a superior financial markets regime. The article concludes that the attainment of safer financial markets does not depend on the mere existence of superior proscriptions. Rather, it is the effective supervision of the sector and robust enforcement of those laws that enhance deterrence and ensure compliance.