NSW insider trading - offense or crime

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AnaAsia

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9 April 2020
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I am a foreign student. I'm trying to explore the regulation of insider trading in Australia. There's one thing I can't understand. insider can be held criminally, administratively an civil liable.

1043A Prohibited conduct by person in possession of inside information:
…Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). For defences to a prosecution based on this subsection, see section 1043M.
Note 2. This subsection is also a civil penalty provision (see section 1317E). For relief from liability to a civil penalty relating to this subsection, see sections 1043N and 1317S…

Could you explain who determines what type of liability should be applied insider for violation of the rules?
Are there criteria for separating an offence from a crime?
I would appreciate your assistance with this matter.
 

Rob Legat - SBPL

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It will come down to how the regulator wishes to prosecute it. They have the option to pursue it as a breach of the relevant section, being either a criminal offence or a civil penalty provision. They will have their own individual take on the criteria, but I would wager it will come down to two considerations:
1. The seriousness of circumstances of committing the offence. You can read into this the amount of 'damage' done, whether the offence is high profile, is it an isolated case, has the perpetrator done it before, is it 'topical', and so on.

2. How much evidence they have. Civil penalties are a lot easier to meet the standard of proof on, as a general rule. To prosecute a civil penalty it's on the 'balance of probabilities' test. Criminal penalties are on the 'beyond a reasonable doubt test'. Individual provisions may be different. Because of 'double jeopardy' type rules, regulators will usually go for the civil penalty unless their case is very good. They don't want to risk losing and not being able to re-prosecute. Additional to that, there is apparently also a potential mechanism in some legislation (but I haven't seen it used, and I don't have anywhere I can point to - so take it with a grain of salt) : A civil penalty can be prosecuted and, if successful, a certificate is issued by the court finding the penalty has been breached. That certificate is considered conclusive evidence (once past the appeal period) of the offence. If further prosecution is warranted/allowed, the regulator could then use the previously success civil action as a springboard to proving a criminal case.
 

AnaAsia

Member
9 April 2020
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Do I understand correctly that there are no criteria in law to separate a crime from an offense?
 

Rob Legat - SBPL

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I can’t think of any articles per se, but you might want to have a look at ASIC’s publication of regulatory outcomes released a couple of times a year. You might get some rationale out of them.

In terms of crime versus offence, offence is an umbrella term applying to a wide range of transgressions against a law. A crime is a particular subset of offenses.