The regulation of insider dealing in the European Union

A precondition as well as a consequence of the increase in global business is the accomplishment of access deregulation. The latter should coexist with the complementary process of prudential re-regulation, in spite of the fear of regulatory arbitrage. Harmonising the different regulatory systems is essential in reducing inconsistencies among national regulations and in achieving unification of the European Internal Market. Reciprocity or Mutual Recognition of standards is also a basic criterion of the Community policy towards the liberalisation of the EU financial markets and the abolition of internal barriers. The main objective of the EU policy regarding securities regulation and, in particular, insider dealing is to establish a basic framework for the protection of investors and, thus, encourage greater confidence in the financial sector. The raison d'etre of the insider dealing regulation is based on the concepts of market integrity, morality and fairness. Economic arguments still support the view that insider dealing is not so obviously detrimental that it needs to be prohibited. Economists have even argued that insider dealing can make stock markets work more Cý In efficiently. The US experience suggests that the broad scope and flexibility of insider dealing rules have been proved to be their weakness and make them susceptible to judicial abuse. In European countries, legal theory followed three successive objectives: the protection of the Company (or fiduciary theory), the protection of the market and, finally, the protection of information. The EC Directive on Insider Dealing takes a positive step towards harmonising the insider dealing laws of EU States. The efficiency of the Directive depends greatly on the severity of sanctions that will be enacted in the Member States. The Directive, being a compromise text, has not always adopted the desirable solutions. The UK Criminal Justice Act 1993 reflects the Directive well but fails to alter any of the sanctions or enforcement procedures that were the main shortcoming of the previous British legislation. The implementation of the Directive by the Greek legislator in Art. 30 of Law 1806/1988 and PD 53/1992 is in conformity with the EC policy. The Greek legislation constitutes an important effort to protect a still unsophisticated market from an anti-economical practice and to make all persons involved in stock market transactions more sensitive about the offence. Insider dealing is often a multi-jurisdictional offence and its prosecution is largely dependent on international conventions both at an EU and an International level. Finally, the task of regulating insider dealing is characterised as the "art of the possible" given that the most sophisticated rules cannot create an oasis of informational equality and the proposal for the formation of a European Securities Commission is expressly supported