ASIC looks to extend Insider Trading Laws to broke

ASIC’s traditional interpretation of the insider trading rules, that you can’t trade in securities if you possess price sensitive information that is not generally known, has been understood to apply to people who worked for the companies only.

The key developments leading to greater attention to this area by regulators in the United States, Canada and now Australia, are that of corporate websites and the forever broadening base of share investors. Price sensitive information has to be brought to the attention of ‘persons who commonly invest in securities’ and a ‘reasonable period’ has to elapse for everyone to absorb it.

This means that the traditional private meetings between analysts and company executives will need to be extended to a wider audience. This could be achieved by either opening up conference calls to the public and including material from analyst briefings on corporate websites.

The internet will clearly prove to be a valuable and effective tool in the distribution of price sensitive information to the broader market. Company executives will need to address this medium in conjunction with analyst briefings, while brokers will need to assess when information becomes widely known. Perhaps disclosure of this information via corporate web sites will appease ASIC and overseas securities regulators.