Treasury dismisses calls for new insider trading agency: Stock Exchange seeks review of law against abuse
Treasury officials played down the possible impact of the exchange's proposal for the agency, saying it was unlikely to achieve more than the present system in which the Department of Trade carries out most of the prosecutions on the basis of evidence gathered by the Stock Exchange.
The Treasury's view emerged after an attack by Paul Myners, chairman of the fund manager Gartmore, that insider trading is rife and the legislation is not working. He said in a letter to the Financial Times that a sharp fall in the price of Tiphook, the transport company, ahead of a profits warning was 'prima facie evidence' of insider trading. In reply, Andrew Hugh Smith, chairman of the exchange, repeated his call for a fundamental review of the way laws against market abuses including insider trading are enforced in the City.
Mr Myners also said that the time had long passed for a radical review of a process that was clearly not working.
Tiphook said it did not believe insider dealing had taken place. But the Stock Exchange is investigating the share price movement.
Mr Hugh Smith wants a new body with police powers, preferably attached to the Securities and Investments Board, to interrogate witnesses and seize documents. The exchange's legal powers are limited, especially over insider traders who are not in member firms.
The exchange rejected claims that its own methods were at fault and said it made more investigations of suspected abuses than 'virtually any other exchange in the world'.
Alistair Darling, Labour's spokesman on the City, said the Serious Fraud Office was the obvious place for a central criminal enforcement agency for the City, rather than the SIB. Mr Darling also said he would be pressing for a much more tightly drawn definition of insider trading in the committee stage of the Criminal Justice Bill, which includes new insider dealing legislation. It begins on 18 May. He said: 'The great risk is that because of the vagueness of the definition very many more people will get off.'
Letters detailing changes to the insider trading part of the bill were sent yesterday to the Stock Exchange and other bodies.
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