The prosecution of suspected insider dealers in criminal courts provides a strong deterrent but also makes it more difficult for investigations to succeed, according to a regulator, lawyers and academics.
Guilt must be established beyond reasonable doubt in the criminal courts, a higher standard than for civil proceedings. Problems in putting the necessary evidence before the courts also arise, they say. It was concerns such as these which led policy makers to believe, for many years, that insider dealing should not be treated as a criminal offence.
The only penalty for insider dealing was public censure, until the setting up of the Insider Dealing Tribunal in 1991.
The tribunal, which had the power in civil proceedings to impose fines and ban offenders from being a company director, was intended to provide more of a deterrent.
But it faced criticism for long drawn-out hearings and the ability of offenders to avoid paying their fines. A turning point came when the Securities and Futures Ordinance was enacted in 2003, making insider dealing a criminal offence.
Since the arrival of Mark Steward as executive director (enforcement) in 2006, the Securities and Futures Commission has ramped up its efforts to crack down on insider dealing, and secured convictions against nine people in four cases.