Article by Steven R. Salbu
Insider trading laws vary widely among nations. Differences exist in both the degree of and approach toward regulation, ranging from strict prohibition of a wide variety of activities to no regulation of insider trading at all. As world markets become increasingly integrated, problems arise in international transactions regarding both conflict of laws and impediments to enforcement of insider trading laws. Commentators have addressed such problems, focusing on foreign legal impediments to enforcement, such as blocking laws in France and secrecy provisions in Switzerland and West Germany.
As regulation of insider trading becomes more common among a diverse set of nations, a comparative analysis of approaches is valuable. This kind of study can help to broaden the perspectives of those considering regulation or regulatory reform within their individual sovereignties. Comparison of insider trading laws can also generate insight into both the manifest and latent functions that regulation serves within particular cultures and pursuant to various economic systems and assumptions.
Moreover, as world markets become globally integrated, we are faced with a difficult decision: whether to continue to support insider trading laws that are idiosyncratic to cultures and their economies, or whether to aim towards worldwide uniformity. The position taken in this analysis is that globalized markets are best served by consistent substantive approaches and compatible infrastructures of enforcement. This proposition is asserted in detail and supported in the pages that follow. The analysis then shifts to the corollary question of how the controlling approach is to be chosen from among the widely divergent cultural and economic norms that exist in the global community.
The examination of these questions begins with an illustrative comparison of the insider trading laws of the United States, the European Economic Community, and Japan. While each nation's approach is treated separately in individual sections, these brief summaries are followed by an integrated discussion containing observations derived from a cross-cultural comparison.
About the Author
Steven R. Salbu. Assistant Professor, Legal and Ethical Environment of Business, University of Texas at Austin. B.A., Hofstra University; M.A. Dartmouth College; J.D., The College of William and Mary; M.A., Ph.D., The Wharton School of the University of Pennsylvania.
Citation
66 Tul. L. Rev. 837 (1992)