Insider trading out in SA
Insider trading is no longer hip in SA. That's according to a new report by the Insider Trading Directorate (ITD), which surveyed a range of the country's financial and legal firms and found that 80% felt that insider trading had become markedly less acceptable.
The survey included actively traded listed companies, member firms of the JSE Securities Exchange, asset management companies, and corporate finance, audit and law firms. It aimed to assess the impact of new anti-insider trading measures taken since South Africa's Insider Trading Act took effect in January 1999.
"The new regime has changed prevailing attitudes to insider trading, resulted in new policies and approaches among listed corporates and their advisers, and - according to most market participants - led to a sharp reduction in the perceived incidence of insider trading", said ITD chair Rob Barrow.
The survey, released in July, found that 93% of respondents were more aware of insider trading rules and that 59% of listed companies had implemented insider trading policies.
Name and shame
Barrow suggests that the negative perceptions of insider trading might be because of the ITD's policy of listing the names of companies being investigated. Companies don't want their names on the list, he said because they feel it will affect their share price.
However, Barrow said there was still room for improvement. Although attitudes towards insider trading have improved, he said it was impossible to eliminate the practice entirely.
"We have not stopped insider trading. You can't stop it because there's too much money to be made", he said.
Only 29% of listed companies interviewed were aware of insider trading rules and requirements.
The Insider Trading Act was introduced following the recommendations of the King Task Group, set up in 1996 to resolve the perception that South Africa suffered from a high level of insider trading.
In its five years of operation, the ITD has completed 162 investigations, with eight in progress. It has instituted 21 cases of civil action and referred six cases for criminal prosecution. Settlements of R47-million in total have been reached with 19 people.
SouthAfrica.info reporter
