Blending fairness and efficiency: An analysis of its desirability in the context of insider trading laws in Australia

Abstract

Purpose

The regulatory approach to insider trading (IT) in Australia is premised on a “blend” of fairness and efficiency which has generated an important controversy. The study aims to investigate this controversy by critically analysing the way the policy maker and judiciary have been striving to accomplish the regulatory goals based on this blend.

Design/methodology/approach

This research is based on existing primary and secondary legal resources.

Findings

Regulation of insider trading (IT) with an appropriate enforcement mechanism has become an important issue in Australia. As part of this, a range of legal studies have unveiled significant difficulties in successfully prosecuting insiders which largely reflect a serious disappointment with the operation of the IT law. Whilst the output of this research motivates and enhances a broad scholarly debate on the credibility of the current regime in combating IT and in generating a strong form of deterrent against prospective insiders, there has been a dearth of intellectual inquiries (to the best of the author's knowledge) backed up by a reliable assessment about the merits of the law, and especially about the issue of how the courts are applying a “blend” of the two policy rationales: market fairness and market efficiency in resolving particular circumstances. It is submitted that this paper will contribute to filling this gap in the legal literature and the wider academic deliberation on the quality and effectiveness of the IT regime.

Originality/value

This paper is the original work of the author and has not been submitted elsewhere for publication.

Citation

Begum, A. (2013), "Blending fairness and efficiency: An analysis of its desirability in the context of insider trading laws in Australia", Journal of Financial Crime, Vol. 20 No. 2, pp. 203-221. https://doi.org/10.1108/13590791311322373