“The Australian Securities and Investments Commission will spend $30 million to build a massive new share-trading surveillance system to detect insider trading and market manipulation”, the Financial Review reports today. That’s really good news, because it means that if the new system works ASIC will have even more information to track down insider traders who manipulate the Australian sharemarkets for their own gain.

Which raises just one question. What will ASIC do with more detailed evidence of insider trading? After all, in the case of the most brazen insider trading episode witnessed in Australia – the case of Steve Vizard’s share deals while he sat on the Telstra board – ASIC has detailed evidence of transactions, dates, board minutes and the public testimony of the accountant who actually made the deals on Vizard’s behalf. Yet it has refused to proceed with a criminal conviction.

“A massive new share-trading surveillance system to detect insider trading and market manipulation” sounds like an excellent idea. But it will be worthless if the perpetrators it uncovers are given a light tap on the wrist and sent on their way. ASIC needs to send lessons to the sharemarket as well as increasing its surveillance of it.

Peter Fray

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