REGULATION AND ENFORCEMENT OF CORPORATE INSIDER DEALINGS IN SOUTH AFRICA: DOES THE EXTANT LEGAL FRAMEWORK OFFER SUFFICIENT PROTECTION TO INVESTORS?

• Published in: BRICS law journal 2022-04, Vol.9 (1)
• Main Authors: Olufemi Oluyeju, Maria Ifeoluwa Oluyeju
• Format: Article
• Language: English
• Subjects: insider dealings, insider trading, financial markets act, ontario securities act, ontario securities commission, financial services board, capital markets, south africa, regulation
• ISSN: 2409-9058; 2412-2343

The securities market represents a very important component of the financial sector in every free-market economy. Ensuring market discipline, integrity and transparency with the over-all protection of the investing public is critical to the wellness of a capital market and a financial system. The need for an effective legal framework that would guarantee a fair and economically safe securities market built on sound policy and practical consideration has therefore become compelling. One corporate ill besetting the securities markets in all jurisdictions is insider trading. Apart from being unethical, insider trading is disruptive of market dynamics. In South Africa, over the years, successive Acts had been enacted, amended and repealed to ensure discipline and protect the integrity of the nation’s securities market. In 2012, the current legislation, Financial Markets Act (FMA), was enacted to improve among others, the enforcement of insider trading regulation in South Africa. The regulation and enforcement of insider trading in terms of the FMA are however insufficient. This article therefore seeks to interrogate whether the FMA offers adequate protection to the investing public in South Africa against the menace of insider trading. The authors conclude that the regulation and enforcement of insider trading in terms of the FMA is insufficient and posit that with creative and appropriate reforms of the FMA, the investing public will be adequately protected against insider trading and investors’ confidence and the financial markets’ integrity and efficiency will be better enhanced.