Statutory Challenges Affecting the Enforcement of the Insider Trading Prohibition in Zimbabwe
Keywords:
market integrity; penalties; offences; insider trading; financial marketsAbstract
Various challenges have to date marred the effective and consistent enforcement of the insider trading prohibition in Zimbabwe. As a result, the regulation of insider trading has remained flawed and problematic in Zimbabwe since the early 1980s to date. For instance, the Zimbabwean anti-insider trading regulatory framework has so far failed to curb insider trading activities owing to several statutory flaws that are imbedded in the Securities Act 17 of 2004 [Chapter 24:25] as amended (Securities Act), such as poor insider trading penalties, inadequate and flawed insider trading provisions and insufficient definitions of key terms for insider trading offences and related aspects. These and other flaws have negatively affected market efficiency, market integrity and public investor confidence in the Zimbabwean financial markets. Consequently, the article exposes the statutory flaws and challenges that are affecting the regulation and combating of insider trading in the Zimbabwean financial markets. Thereafter, possible measures that could be adopted by the relevant authorities to enhance the regulation and enforcement of the Zimbabwean anti-insider trading prohibition are provided.
References
Arshadi, N. (1998). “Insider Trading Liability and Enforcement Strategy”. Financial Management, pp.70-84.
Bainbridge, S.M. (1986). “The Insider Trading Prohibition: A Legal and Economic Enigma”. University of Florida Law Review, 38, pp. 35-68.
Banerjee, S, Humphery-Jenner, M., Nanda, V. and Tham, T.M. (2018). “Executive Overconfidence and Securities Class Actions”. Journal of Financial and Quantitative Analysis, 53(6), pp.2685-2719.
Basdeo, V. (2014). “The Law and Practice of Criminal Asset Forfeiture in South African Criminal Procedure: A Constitutional Dilemma”. Potchefstroom Electronic Law Journal, 17(3), pp. 1048-1069.
Beny, L.N. (2007). Insider Trading Laws and Stock Markets Around the World: An Empirical Contribution to the Theoretical Law and Economics Debate. The Journal of Corporation Law, 32(2), pp. 237-300.
Blumberg, J.A. (1985). “Implications of the 1984 Insider Trading Sanction Act: Collateral Estoppel and Double Jeopardy”. North Carolina Law Review, 64(1), pp. 117-158.
Bromberg, L., Gilligan, G., Hedges, J. and Ramsay, I. (2016). “Sanctions Imposed for Insider Trading in Australia, Canada (Ontario), Hong Kong, Singapore, New Zealand, the United Kingdom and the United States: An Empirical Study”. Centre for International Finance and Regulation, Working Paper No. 117/2016, pp.1-49.
Botha, D. (1991). “Control of Insider Trading in South Africa: A Comparative Analysis”. South African Mercantile Law Journal, 3, pp. 1-18.
Carr, B.J. (1999). “Culpable Intent Required for All Criminal Insider Trading Convictions After United States v O'Hagan”. Boston College Law Review, 40(5), pp.1187-1220.
Cassim, R. (2007). “Some Aspects of Insider Trading-Has the Securities Services Act 36 of 2004 Gone too Far”. South African Mercantile Law Journal, 19(1), pp. 44-70.
Cox, D.J. (1990). “An Outsider’s Perspective of Insider Trading Regulation in Australia”. Sydney Law Review, 12, pp. 455-481.
Chew, M. (1998). “The Adequacy and Efficacy of Civil Remedies for Insider Trading: Comparative Critique”. Singapore Journal of Legal Studies, 2, pp. 331-375.
Chitimira, H. and Lawack, V.A. (2012). “An Analysis of the General Enforcement Approaches to Combat Market Abuse (Part 1)”. Obiter, 33(3), pp. 548-565.
Chitimira, H. (2014). “A Historical Overview of the Regulation of Market Abuse in South Africa”. Potchefstroom Electronic Law Journal, 17(3), pp. 937-971.
Chitimira, H. and Lawack, V.A. (2013). “Overview of the Role-Players in the Investigation, Prevention and Enforcement of Market Abuse Provisions in South Africa”. Obiter, 34(2), pp. 200-217.
Chitimira, H. (2015). The Regulation of Insider Trading in Australia: A Historical and Comparative Analysis. Speculum Juris, 29(1), pp. 86–107.
Chitimira, H. (2014). “Overview of the Market Abuse Regulation under the Financial Markets Act 19 of 2012”. Obiter, 35(2), pp. 254-271.
Cinar, E.M. (1999). “The Issue of Insider Trading in Law and Economics: Lessons for Emerging Financial Markets in The World”. Journal of Business Ethics, 19(4), pp. 345-353.
Dalko, V. and Wang, M.H. (2016). “Why is Insider Trading Law Ineffective? Three Antitrust Suggestions”. Studies in Economics and Finance, 33(4), pp. 704-715.
Du Plessis, J.J. and Lyon, G. (2005). The Law of Insider Trading in Australia. Sydney: The Federation Press.
Feldman, J. and Logan, S. (1996). “Insider Trading: An Evaluation of the South African Position”. Juta's Business Law, 4(2), pp. 55-57.
Hazen, T.L. (1982). “Corporate Insider Trading: Reawakening the Common Law”. Washington and Lee Law Review, 39(3), pp. 845-860.
Huang, H. (2012). “Insider trading and the Regulation on China’s Securities Market: Where Are We Now and Where Do We Go from Here?”. Journal of Business Law, (5), pp. 379-403.
Huang, H. (2006). International Securities Markets: Insider Trading Law in China. Netherlands: Kluwer Law International.
Jooste, R. (2000). “The Regulation of Insider Trading in South Africa: Another Attempt”. The South African Law Journal, 17, pp. 283-286.
Karjala, D.S. (1982). “Statutory Regulation of Insider Trading in Impersonal Markets”. Duke Law Journal, 4, pp. 627-650.
Luchtman, M. and Vervaele, J. (2014). “Enforcing the Market Abuse Regime: Towards an Integrated Model of Criminal and Administrative Law Enforcement in the European Union?”. New Journal of European Criminal Law, 5(2), pp. 192-220.
Luiz, S. and Van der Linde, K. (2013). “The Financial Markets Act 19 of 2012: Some Comments on the Regulation of Market Abuse”. SA Mercantile Law Journal, 25(4), pp. 458-491.
Luiz, S.M. (2011). “Market Abuse and the Enforcement Committee”. South African Mercantile Law Journal, 23(2), pp. 151-172.
Mataruka, T. and Mahombera, N. (2018). Market Abuse Regulatory Interview, conducted by the authors at the Securities and Exchange Commission of Zimbabwe (SECZ) with Mataruka (Legal and Licensing Officer of the SECZ) and Mahombera (Surveillance and Risk Manager of the SECZ), on 29 June 2018.
Massawe, H.T. and Kadilu, M. (2014). “Combatting Insider Trading in Tanzania: The Adequacy of the Capital Markets and Securities Act of 1994 and the Companies Act of 2002”. Law in Africa, 17, pp. 52-63.
Morajane, T.C. (2017). “What Constitutes Inside Information for Purposes of Insider Trading?: Zietsman v Directorate of Market Abuse 2016 1 SA 218 (GP)”. Journal of Contemporary Roman-Dutch Law, 80, pp. 506-523.
Mwenda, K.K. (1997). “Redefining Insider Dealing Law for Emerging Markets: A Comparative Legal Study”. The Zimbabwe Law Review, 14, pp. 29-46.
Mwenda, KK. (1996-1999). “Insider Dealing Law in Zambia: A Flawed Concept”. University of Ghana Law Journal, 20, pp.137-156.
Öberg, J. (2014). “Is it ‘Essential’ to Imprison Insider Dealers to Enforce Insider Dealing Laws?”. Journal of Corporate Law Studies, 14(1), pp. 111-138.
O’Hara, A.P. (2001). “Insider Trading in Financial Markets: Legality, Ethics, Efficiency”. International Journal of Social Economics, 28, pp. 1046-1063.
Osode, P.C. “Defending The Regulation of Insider Trading on Basis of Sound Legal Orthodoxy: The Fiduciary Obligations Theory Law” in Okpaluba, C. (ed). (2004). Law in Contemporary South African Society. Cape Town: New Africa Books South Africa.
Osode, P.C. (2000). “The New South African Insider Trading Act: Sound Law Reform or Legislative Overkill?”. Journal of African Law, 44(2), pp. 239-263.
Palan, S. and Stockl, T. (2017). “When Chasing the Offender Hurts the Victim: The Case of Insider Legislation”. Journal of Financial Markets, 35, pp. 104-129.
Pfaeltzer, J.J. (2014). “Naming and Shaming in Financial Market Regulations: Violation of the Presumption of Innocence”. Utrecht Law Review, 10(1), pp.134-148.
Saungweme, P, Ricardo, P. and Pradeep, B. (2013). “A Framework for Combating Insider Trading on Developing Stock Exchanges: Evidence from the Zimbabwean Stock Exchange”. African Journal of Business Management, 7(17), pp. 1630-1639.
Schipani, C.A. and Seyhun, H. (2016). “Defining Material, Nonpublic: What Should Constitute Illegal Insider Information”. Fordham Journal of Corporate and Financial Law, 21(2), pp. 327-378.
Silver, C.B. (1985). “Penalizing Insider Trading: A Critical Assessment of the Insider Trading Sanctions Act of 1984”. Duke Law Journal, pp. 960-1025.
Smith, T. and Block, W.E. (2016). “The Economics of Insider Trading: A Free Market Perspective”. Journal of Business Ethics, 139(1), pp. 47-53.
Spitz, M.A. “Recent Developments in Insider Trading Laws and Problems of Enforcement in Great Britain”. (1989). Boston College International and Comparative Law Review, 12, pp. 265-290.
Shen, H. (2008). “A Comparative Study of Insider Trading Regulation Enforcement in the US and China”. Journal of Business and Securities Law, 9(1), pp. 41-74.
Tsaurai, K. and Odhiambo, N.M. (2012). “The Dynamics of Capital Market Development in Zimbabwe”. Corporate Ownership and Control Journal, 9(2), pp. 355-363.
Warren, M. (1991). “The Regulation of Insider Trading in the European Community”. Washington and Lee Law Review, 48(3), pp. 1037-1078.
Van Der Linde, K. and Luiz, S. (2009). “Aspects of the Cross-listing of Securities”. SA Mercantile Law Journal, 21(5), pp. 631-644.
Van Deventer, G. (2009). Harnessing Administrative Law in Encouraging Compliance. Financial Services Board Bulletin, 1, pp. 3-4.
Internet Sources
Magaisa, A.T. (2006). “Regulating Insider Trading”. https://www.theindependent.co.zw/2006/06/16/regulating-insider-trading/ last accessed 17 January 2021.
Bainbridge, S.M. (1986). “The Insider Trading Prohibition: A Legal and Economic Enigma”. University of Florida Law Review, 38, pp. 35-68.
Banerjee, S, Humphery-Jenner, M., Nanda, V. and Tham, T.M. (2018). “Executive Overconfidence and Securities Class Actions”. Journal of Financial and Quantitative Analysis, 53(6), pp.2685-2719.
Basdeo, V. (2014). “The Law and Practice of Criminal Asset Forfeiture in South African Criminal Procedure: A Constitutional Dilemma”. Potchefstroom Electronic Law Journal, 17(3), pp. 1048-1069.
Beny, L.N. (2007). Insider Trading Laws and Stock Markets Around the World: An Empirical Contribution to the Theoretical Law and Economics Debate. The Journal of Corporation Law, 32(2), pp. 237-300.
Blumberg, J.A. (1985). “Implications of the 1984 Insider Trading Sanction Act: Collateral Estoppel and Double Jeopardy”. North Carolina Law Review, 64(1), pp. 117-158.
Bromberg, L., Gilligan, G., Hedges, J. and Ramsay, I. (2016). “Sanctions Imposed for Insider Trading in Australia, Canada (Ontario), Hong Kong, Singapore, New Zealand, the United Kingdom and the United States: An Empirical Study”. Centre for International Finance and Regulation, Working Paper No. 117/2016, pp.1-49.
Botha, D. (1991). “Control of Insider Trading in South Africa: A Comparative Analysis”. South African Mercantile Law Journal, 3, pp. 1-18.
Carr, B.J. (1999). “Culpable Intent Required for All Criminal Insider Trading Convictions After United States v O'Hagan”. Boston College Law Review, 40(5), pp.1187-1220.
Cassim, R. (2007). “Some Aspects of Insider Trading-Has the Securities Services Act 36 of 2004 Gone too Far”. South African Mercantile Law Journal, 19(1), pp. 44-70.
Cox, D.J. (1990). “An Outsider’s Perspective of Insider Trading Regulation in Australia”. Sydney Law Review, 12, pp. 455-481.
Chew, M. (1998). “The Adequacy and Efficacy of Civil Remedies for Insider Trading: Comparative Critique”. Singapore Journal of Legal Studies, 2, pp. 331-375.
Chitimira, H. and Lawack, V.A. (2012). “An Analysis of the General Enforcement Approaches to Combat Market Abuse (Part 1)”. Obiter, 33(3), pp. 548-565.
Chitimira, H. (2014). “A Historical Overview of the Regulation of Market Abuse in South Africa”. Potchefstroom Electronic Law Journal, 17(3), pp. 937-971.
Chitimira, H. and Lawack, V.A. (2013). “Overview of the Role-Players in the Investigation, Prevention and Enforcement of Market Abuse Provisions in South Africa”. Obiter, 34(2), pp. 200-217.
Chitimira, H. (2015). The Regulation of Insider Trading in Australia: A Historical and Comparative Analysis. Speculum Juris, 29(1), pp. 86–107.
Chitimira, H. (2014). “Overview of the Market Abuse Regulation under the Financial Markets Act 19 of 2012”. Obiter, 35(2), pp. 254-271.
Cinar, E.M. (1999). “The Issue of Insider Trading in Law and Economics: Lessons for Emerging Financial Markets in The World”. Journal of Business Ethics, 19(4), pp. 345-353.
Dalko, V. and Wang, M.H. (2016). “Why is Insider Trading Law Ineffective? Three Antitrust Suggestions”. Studies in Economics and Finance, 33(4), pp. 704-715.
Du Plessis, J.J. and Lyon, G. (2005). The Law of Insider Trading in Australia. Sydney: The Federation Press.
Feldman, J. and Logan, S. (1996). “Insider Trading: An Evaluation of the South African Position”. Juta's Business Law, 4(2), pp. 55-57.
Hazen, T.L. (1982). “Corporate Insider Trading: Reawakening the Common Law”. Washington and Lee Law Review, 39(3), pp. 845-860.
Huang, H. (2012). “Insider trading and the Regulation on China’s Securities Market: Where Are We Now and Where Do We Go from Here?”. Journal of Business Law, (5), pp. 379-403.
Huang, H. (2006). International Securities Markets: Insider Trading Law in China. Netherlands: Kluwer Law International.
Jooste, R. (2000). “The Regulation of Insider Trading in South Africa: Another Attempt”. The South African Law Journal, 17, pp. 283-286.
Karjala, D.S. (1982). “Statutory Regulation of Insider Trading in Impersonal Markets”. Duke Law Journal, 4, pp. 627-650.
Luchtman, M. and Vervaele, J. (2014). “Enforcing the Market Abuse Regime: Towards an Integrated Model of Criminal and Administrative Law Enforcement in the European Union?”. New Journal of European Criminal Law, 5(2), pp. 192-220.
Luiz, S. and Van der Linde, K. (2013). “The Financial Markets Act 19 of 2012: Some Comments on the Regulation of Market Abuse”. SA Mercantile Law Journal, 25(4), pp. 458-491.
Luiz, S.M. (2011). “Market Abuse and the Enforcement Committee”. South African Mercantile Law Journal, 23(2), pp. 151-172.
Mataruka, T. and Mahombera, N. (2018). Market Abuse Regulatory Interview, conducted by the authors at the Securities and Exchange Commission of Zimbabwe (SECZ) with Mataruka (Legal and Licensing Officer of the SECZ) and Mahombera (Surveillance and Risk Manager of the SECZ), on 29 June 2018.
Massawe, H.T. and Kadilu, M. (2014). “Combatting Insider Trading in Tanzania: The Adequacy of the Capital Markets and Securities Act of 1994 and the Companies Act of 2002”. Law in Africa, 17, pp. 52-63.
Morajane, T.C. (2017). “What Constitutes Inside Information for Purposes of Insider Trading?: Zietsman v Directorate of Market Abuse 2016 1 SA 218 (GP)”. Journal of Contemporary Roman-Dutch Law, 80, pp. 506-523.
Mwenda, K.K. (1997). “Redefining Insider Dealing Law for Emerging Markets: A Comparative Legal Study”. The Zimbabwe Law Review, 14, pp. 29-46.
Mwenda, KK. (1996-1999). “Insider Dealing Law in Zambia: A Flawed Concept”. University of Ghana Law Journal, 20, pp.137-156.
Öberg, J. (2014). “Is it ‘Essential’ to Imprison Insider Dealers to Enforce Insider Dealing Laws?”. Journal of Corporate Law Studies, 14(1), pp. 111-138.
O’Hara, A.P. (2001). “Insider Trading in Financial Markets: Legality, Ethics, Efficiency”. International Journal of Social Economics, 28, pp. 1046-1063.
Osode, P.C. “Defending The Regulation of Insider Trading on Basis of Sound Legal Orthodoxy: The Fiduciary Obligations Theory Law” in Okpaluba, C. (ed). (2004). Law in Contemporary South African Society. Cape Town: New Africa Books South Africa.
Osode, P.C. (2000). “The New South African Insider Trading Act: Sound Law Reform or Legislative Overkill?”. Journal of African Law, 44(2), pp. 239-263.
Palan, S. and Stockl, T. (2017). “When Chasing the Offender Hurts the Victim: The Case of Insider Legislation”. Journal of Financial Markets, 35, pp. 104-129.
Pfaeltzer, J.J. (2014). “Naming and Shaming in Financial Market Regulations: Violation of the Presumption of Innocence”. Utrecht Law Review, 10(1), pp.134-148.
Saungweme, P, Ricardo, P. and Pradeep, B. (2013). “A Framework for Combating Insider Trading on Developing Stock Exchanges: Evidence from the Zimbabwean Stock Exchange”. African Journal of Business Management, 7(17), pp. 1630-1639.
Schipani, C.A. and Seyhun, H. (2016). “Defining Material, Nonpublic: What Should Constitute Illegal Insider Information”. Fordham Journal of Corporate and Financial Law, 21(2), pp. 327-378.
Silver, C.B. (1985). “Penalizing Insider Trading: A Critical Assessment of the Insider Trading Sanctions Act of 1984”. Duke Law Journal, pp. 960-1025.
Smith, T. and Block, W.E. (2016). “The Economics of Insider Trading: A Free Market Perspective”. Journal of Business Ethics, 139(1), pp. 47-53.
Spitz, M.A. “Recent Developments in Insider Trading Laws and Problems of Enforcement in Great Britain”. (1989). Boston College International and Comparative Law Review, 12, pp. 265-290.
Shen, H. (2008). “A Comparative Study of Insider Trading Regulation Enforcement in the US and China”. Journal of Business and Securities Law, 9(1), pp. 41-74.
Tsaurai, K. and Odhiambo, N.M. (2012). “The Dynamics of Capital Market Development in Zimbabwe”. Corporate Ownership and Control Journal, 9(2), pp. 355-363.
Warren, M. (1991). “The Regulation of Insider Trading in the European Community”. Washington and Lee Law Review, 48(3), pp. 1037-1078.
Van Der Linde, K. and Luiz, S. (2009). “Aspects of the Cross-listing of Securities”. SA Mercantile Law Journal, 21(5), pp. 631-644.
Van Deventer, G. (2009). Harnessing Administrative Law in Encouraging Compliance. Financial Services Board Bulletin, 1, pp. 3-4.
Internet Sources
Magaisa, A.T. (2006). “Regulating Insider Trading”. https://www.theindependent.co.zw/2006/06/16/regulating-insider-trading/ last accessed 17 January 2021.
Published
2021-07-27
How to Cite
Chitimira, H. (2021). Statutory Challenges Affecting the Enforcement of the Insider Trading Prohibition in Zimbabwe: Array. Acta Universitatis Danubius. Juridica, 17(2). Retrieved from https://dj.univ-danubius.ro/index.php/AUDJ/article/view/847
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