Insider Dealing

HC Deb 10 May 1995 vol 259 cc742-3

14. Mr. Mudie

To ask the President of the Board of Trade if he will make a statement on the outcome of meetings with the Securities and Investments Board on insider dealing. [21955]

Mr. Jonathan Evans

My Department has regular contacts with the Securities and Investments Board plc on a wide range of subjects, including, but not limited to, insider dealing.

Mr. Mudie

In the nine years since the insider trading legislation was enacted, fewer than 10 people have been convicted. As that crime is widespread, why have so few people been convicted? When can the small, ordinary investor expect Government action and protection? Are the Government, having indulged in a spot of insider dealing themselves over the sale of National Power, too ashamed to legislate?

Mr. Evans

Perhaps the hon. Gentleman, if he has an ounce of generosity in him, will recognise that the Government introduced that legislation. A Conservative Government attempted to legislate in 1973, but the Bill was overtaken by the election in 1974. Between 1974 and 1979, no such legislation was enacted by the Labour Government. The legislation was introduced by the Conservative Government in 1985. It was recognised at that time that tackling insider dealing is difficult and complex for evidential reasons as much as for anything else.

Mr. Mudie

indicated assent.

Mr. Evans

I note that the hon. Gentleman accepts that.

It was for that reason that the law was subsequently refined. The hon. Gentleman will know that, in 1993, further provisions were taken through the House by the Government, which became operable on 1 March 1994. The Government consider it appropriate that we should look at the way in which that legislation is working.

Mr. Jenkin

Does my hon. Friend agree that it would be a rather perverse way of judging the effectiveness of the criminal law if we based it on the number of criminal prosecutions? It would not be a very good advertisement for the criminal law if we said that the more murders there are, the more effective are our courts and criminal law. Does my hon. Friend agree also that a balance has to be struck between the flow of information between companies and the market and the restrictions that we place on that flow of information with insider dealing rules? Would it not be wrong for unrealistic share prices to be shown on screens in our dealing markets because the flow of information was too stifled?

Mr. Evans

My hon. Friend accurately describes some of the evidential difficulties in attempting to characterise certain behaviour as insider dealing. He shows that we must proceed in such cases on the basis of evidence of wrongdoing rather than party political prejudice.

Dr. John Cunningham

In view of the ease with which almost everyone under suspicion, including, most recently, Lord Archer, avoids even being charged with insider dealing, will the Minister confirm that, at recent meetings, the Securities and Investments Board has pressed his Department to change the law? Is it not obvious that such changes could mean civil rather than criminal sanctions, thus making it easier to surcharge wrongdoers, and that his Department is the Department that is objecting to and blocking such changes? Apart from the obvious protection of the old pals act, will the Minister tell the House why that is?

Mr. Evans

I can deal with the right hon. Gentleman's question very shortly: he should not believe everything that he reads in the newspapers.