Insider trading in Malaysia; towards an improved regulation

Abstract

PurposeThis paper aims to gauge the issue of insider trading in Malaysia by assessing some selected statutory provisions under the relevant law and examining the issues of enforcement and prosecution.Design/methodology/approachThe paper analyses relevant legislation pertaining to insider trading.FindingsThis paper argues that in order to be an effective regulation, the laws enacted must address the concerns and problems insider trading has given rise to. Contrary to popular impression that insider trading is a settled issue due to the lack of investigation and prosecution cases, the paper unearths a number of findings; first it maintains its contention that the provisions under the Companies Act 1965 are not entirely satisfactory and the latter regulations generally provide more creditable rules with regard to the issue. Further the definition of an insider, the requirement pertaining to the manner the information must be obtained and the enforcement of the law are amongst a number of issues that Malaysia has to address if a more competitive capital market is to be created.Research limitations/implicationsFurther research could usefully examine the law in the light of investigation cases by the security commission.Practical implicationsThe paper reveals how insider trading legislation applies in business situations.Originality/valueThe insider trading legislation is found out to be far from satisfactory, and this paper attempts to fill in the gaps where there is scarcity of literature on this issue.