Preview

BRICS Law Journal

Advanced search

Legal Protection of Investors from the Corporate Malfeasance of Insider Dealings: A South African-Canadian Comparative Review

https://doi.org/10.21684/2412-2343-2022-9-1-136-167

Full Text:

Abstract

Ensuring market discipline, integrity, and transparency with the overall aim of protecting the investing public is critical to the wellness of a capital market and a financial system. However, one corporate ill besetting the securities markets in all jurisdictions is insider trading. Apart from being unethical, insider trading disrupts market dynamics. In South Africa, over the years, successive Acts have been enacted, amended, and repealed to ensure discipline and protect the integrity of the nation’s securities market. In 2012, the Financial Markets Act of 2012 (FMA) was enacted to improve, among others, the enforcement of insider trading regulation in South Africa. However, the regulation of insider trading and its enforcement in terms of the FMA have been insufficient. This article therefore seeks to benchmark the South African position against Canadian model with the objective of drawing lessons for South Africa. The choice of Canada was informed by the fact that Canada has a well-developed anti-insider trading regulatory framework and presents a case study of international best practices in the regulation of insider trading. Therefore, the conclusion in this article is that with creative and appropriate reforms of the FMA, using the Canadian model, the investing public will be adequately protected against insider trading, and investors’ confidence and the financial markets’ integrity and efficiency will be better enhanced.

About the Authors

M. Oluyeju
Herbert Smith Freehills South Africa LLP
South Africa

Maria Oluyeju – Legal Analyst

Rosebank Towers, Biermann Avenue, Sandton, Johannesburg, 2196



O. Oluyeju
University of Venda
South Africa

Olufemi Oluyeju – Senior Lecturer, Department
of Public Law

Thohoyandou, Limpopo, 0950 



References

1. Botha D. Control of Insider Trading in SA: A Comparative Analysis, 3(1) S.A. Merc. L.J. 1 (1991).

2. Cassim F.H.I. et al. The Law of Business Structures (2012).

3. Cassim R. Some Aspects of Insider Trading – Has the Securities Services Act 36 of 2004 Gone too Far?, 19(1) S.A. Merc. L.J. 44 (2007).

4. Chitimira H. A Historical Overview of the Regulation of Market Abuse in South Africa, 17(3) Potchefstroom Electron. L.J. 936 (2014). https://doi.org/10.17159/1727-3781/2014/v17i3a2275

5. Dooley M.P. Enforcement of Insider Trading Restrictions, 66(1) Va. L. Rev. 1 (1980). https://doi.org/10.2307/1072503

6. Jooste R. A Critique of the Insider Trading Provisions of the 2004 Securities Services Act, 123(3) S.A. L.J. 437 (2006).

7. Luiz S. & Van der Linde K. The Financial Markets Act 19 of 2012: Some Comments on the Regulation of Market Abuse, 35(4) S.A. Merc. L.J. 458 (2013).

8. Luiz S. Insider Trading: A Transplant to Cure a Chronic Illness?, 2(1) S.A. Merc. L.J. 59 (1990).

9. Luiz S. Prohibition Against Trading on Inside Information – The Saga Continues, 2(3) S.A. Merc. L.J. 328 (1990).

10. Osode P. The New South African Insider Trading Act: Sound Law Reform or Legislative Overkill?, 44(2) J. Afr. L. 239 (2002). https://doi.org/10.1017/s0021855300012237

11. Schotland R.A. Unsafe at Any Price: A Reply to Manne, Insider Trading and the Stock Market, 53(7) Va. L. Rev. 1425 (1967). https://doi.org/10.2307/1071845


Review

For citations:


Oluyeju M., Oluyeju O. Legal Protection of Investors from the Corporate Malfeasance of Insider Dealings: A South African-Canadian Comparative Review. BRICS Law Journal. 2022;9(1):136-167. https://doi.org/10.21684/2412-2343-2022-9-1-136-167

Views: 406


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 License.


ISSN 2409-9058 (Print)
ISSN 2412-2343 (Online)
X