A war of words has broken out between the Securities and Futures Commission and the Department of Justice over the handling of market manipulation cases.
The SFC yesterday accused the DOJ of failing to prosecute "serious and complex" cases in the higher courts, where tougher sentences can be imposed.
In a statement on its website, the market regulator said it had also raised concerns about the resources made available by the DOJ for its cases and the time taken by prosecutors to handle them.
Director of Public Prosecutions Kevin Zervos then hit back, saying none of the cases concerned had justified a trial in the higher courts.
He said the SFC had kept the DOJ in the dark about cases involving criminality and was now refusing to prosecute one case it had previously wanted tried in the District Court.
"There needs to be a serious look into these matters,' he added.
The SFC statement was made in response to earlier calls by Zervos for it to be stripped of its power to prosecute certain cases before a magistrate on its own.
Market manipulation cases which the SFC believed to be complex and serious had been referred by it to the Prosecutions Division of the DOJ under a 2007 arrangement, the statement said.
But none of these cases had been prosecuted in the higher courts during the tenure of Zervos as DPP, it added.
"The SFC has raised concerns with the DOJ over the level of resources allocated within the Prosecutions Division for the handling of SFC cases, the time taken to respond to referrals by the SFC and decisions about whether market misconduct cases should be prosecuted on indictment by the Prosecutions Division or summarily by the SFC," it said.
"The SFC believes many of these cases are complex and serious and should be prosecuted by the Prosecutions Division on indictment in the higher courts of record rather than by the SFC in the magistrates' courts," the statement added.
It said: "In its 24 years of prosecuting, the SFC has discharged its prosecutorial responsibility fairly and in full compliance with all relevant obligations and standards."
Zervos, however, said the cases concerned were better dealt with by magistrates, because the likely penalty was at a level which they can impose. Magistrates can pass prison terms of up to three years.
"No case has warranted being put in the higher courts as the penalty was always well within that limit," he added.
He said one case had been taken to the District Court during his tenure, but it resulted in a prison term of only six months.
There was another case, he said, which the SFC had wanted the DOJ to prosecute in the District Court. But prosecutors felt it was better for the SFC to pursue the case in the magistrates court. "Now, they are refusing to prosecute," said Zervos.
He added there were adequate resources within the DOJ for SFC cases, although the process had been "time consuming and repetitive".
"We always have to make sure cases are being properly prosecuted and cases that warrant being pursued are pursued."
Zervos, who steps down as DPP at the end of next week, called for the SFC to be stripped of its power to prosecute in the magistrates' courts in his annual review this month.