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National Treasury puts insider traders on notice

By Anyanzwa James
Updated Sunday, June 16th 2013 at 00:00 GMT +3
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The amendment to the Act, he reckons, would address the challenges of insider trading and safeguard the integrity of the local capital markets.

He said the amendments would also identify a range of the most common market manipulation offences, which would guide the courts and the investing public on the nature of these offences.

The capital markets are expected to play a pivotal role in the attainment of  Vision 2030. It is essential that obstacles to the attainment of a fair and efficient market are examined and rooted out.

Insider trading refers to buying, selling and dealing in shares and securities of a listed company by insiders.

They  inclue directors, officers of  management team, employees of the company or any other connected persons such as auditors, consultants, lawyers and analysts who possess material inside information that is not available to the investing public.

The malpractice   is prohibited because it favours few insiders with advantageous information while denying the same to the public.

Criminal offence

The Capital Markets Act expressly prohibits insider trading and establishes this practice as a criminal offence.

Despite prohibition, there have been few prosecutions. None of these have been successful,  partly due to challenges faced in the prosecution process.

  The Capital Markets Act prohibits insider trading. It  stipulates statutory defenses and sets out the sanctions for insider trading. 

It also gives  licensing, regulation and supervision of all capital markets participants to the CMA.

 The Act also disseminates rules and regulations and is empowered to carry out enforcement and sanctions.

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