Object of recommendations ‘to prevent, not punish’

Press, 28 December 1987, Page 3

Object of recommendations ‘to prevent, not punish’

The object of the recommendations was not to punish but to prevent, Mr Patterson said. They were intended to be self-policing but the commission was getting more resources and would have a monitoring role. The commission would review its position when the recommendations had been implemented and it could see how they were working. What it was seeking was a variation to the longheld legal belief that no-

one should be required to incriminate themselves, he said. Questions related to what in the United States was the Fifth Amendment to their Constitution were always fraught with difficulties. Mr Palmer said he would urge the Government to change the rules on self-incrimination in this case so companies and corporations could be called on to justify their conduct. “We will look at it in that context, but have no

plans or wish to change the whole criminal law code on self-incrimina-tion,” he said. Seeking to correct insider trading problems through changes to the criminal law would not get very far, and there were other and better ways. The commission made five recommendations for legislation to be enacted: • To implement its 1982 proposals for the reporting of substantial shareholdings and in-

terests in shares in listed companies. • Confer in certain cases upon every person who buys a security from or sells a security to an insider, and who suffers loss because the insider has information in confidence that is relevant to the transaction, the right to recover compensation for that loss from the insider. • Confer in certain cases on companies the rights to recover from insiders who buy or sell securities while they have

in confidence information relevant to the transaction, sums of money equal to the gains obtained or the losses avoided together with civil penalties. • To confer upon the courts jurisdication to disqualify an insider trader from holding office in a company. e Confer upon the courts jurisdiction to revoke a sharebroker’s licence where the licensee has traded as an insider.