Penalties for Insider Trading

An individual who is found guilty of the criminal offence of insider trading in Australia is subject to a maximum fine of $450,000 and/or ten years imprisonment.

A corporation found guilty of the criminal offence for insider trading is liable for a fine of up to $1.1 million.

It is open to the Australian Securities and Investments Commission (ASIC) to pursue civil penalty proceedings instead of criminal proceedings for these offences. If ASIC do pursue the civil penalty regime, an individual is liable for a fine of up to $450,000 and a corporation $1 million.

In making that assessment as to whether to pursue civil penalty proceedings instead of criminal proceedings for these offences, ASIC weighs up a number of factors and works (under an Memorandum of Understanding (MOU) with the Commonwealth director of Public Prosections (CDPP).

Civil penalty proceedings may be more attractive to ASIC as they can be pursued by ASIC itself and not require another agency (CDPP), and they only have to prove the matter on the balance of probabilities and not beyond a reasonable doubt. In addition, civil penalty proceedings can provide quicker settled outcomes.

Nevertheless, Tony D’Alosio, chairman of ASIC, recently acknowledged that ASIC’s approach in more recent times has been to pursue criminal proceedings for these offences.

He stated that “Although preparation of such cases takes longer, ASIC’s view is that criminal proceedings and sanctions, including imprisonment, are what will ‘focus the minds’ of those who may be inclined to stray.”