The use of criminal law in relation to insider dealing in the United Essay

The use of criminal law in relation to insider dealing in the United Kingdom is both draconian and unnecessary. Discuss - Essay Example The proposed criminal laws purport that the act is unfair since an investor who has inside information is highly likely to make more profits as compared to a typical investor. Other scholars claim that unauthorised insider trading tends to increase the cost of capital on the issuers of securities; hence, reducing economic growth (Alexander 2007, pp. 229-230). However, it is undoubtedly that though the set criminal laws are meant to help the investors and ensure economic success, they are unnecessary, draconian, and obviously counter-intuitive. Wagner (2011, pp. 974-975) asserts that the criminal laws are extreme and there is a need to legalise insider dealings to benefit the markets, ensure more transparency, reduce accounting fraud, and act on timely and factual information. Various scholars posit that criminal laws regarding insider trading in the UK are unnecessary and are a burden to some market participants. This is because though such trading has been illegal since the year 1980, it has always been difficult to effectively prosecute persons who have been accused of such dealings. In most cases, the suspects are able to escape arrest or prosecution; thus, the regulators often rely on fines to punish those who are found abusing the market. It is unfortunate though that the fines have always been perceived as inefficient since the perpetrators are able to walk scot-free since they have the necessary resources to cover their fines. In that case, this only increases the rate of misconduct; making the set laws redundant (Ferran 2004, pp. 44-45). The number of insider dealing cases by the Financial Conduct Authority in the UK has heightened in the past years. Since the year 2009 to 2013, there have been roughly 23 convictions. For instance, in 2009, Christian Littlewood who was a corporate financier and an insider trader was sentenced to three years and four months in jail. It was believed that the gross profit accumulated from his