Comment: Insider dealing should stay a criminal offence

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The Independent Online
Alistair Darling, Chief Secretary to the Treasury, has long favoured turning insider dealing from a criminal into a civil offence, so reports that he is actually going to do so in the forthcoming Financial Services Bill to create the super-SIB should not come as much of a surprise.

However, it is one thing to say something fashionable while in Opposition, quite another to do it when actually in Government. While any such move would recognise the practicalities and difficulties associated with addressing insider dealing, it would also to many Old Labour supporters be seen as something of a betrayal, a formal recognition of the principle that there is one law for the poor and an altogether different one for the rich.

On the positive side, making insider dealing a civil offence would ease the burden of proof and allow many more such cases to be brought to the courts. On the negative side, it would rule out the penalty of imprisonment and the people's right to brand offenders of this sort as criminals. Social security cheats would continue to be treated as the thieves they are, financial ones would escape with a fine and a ban. This is not really good enough and it is certainly not what society demands.

In any case, it is not at all clear that transforming the offence into a civil one would make it any easier to deal with the real endemic problem of insider dealing. This is not the hundreds of small to medium sized cases which each year founder on lack of evidence or the law's inability adequately to define the crime, but the big professional City insider dealing rings, operating furtively behind the cover of offshore immunity. Here the problem is not one of prosecution, but that of discovery and investigation. Even in civil proceedings, it would not be possible to bring a case on circumstantial evidence alone.

Abandoning criminal sanctions in favour of civil ones is not the solution. Rather it is in beefing up powers of investigation, allowing regulators to mount undercover operations, tap phones and the like. Only then will the real villains start to be brought to book.