The Hong Kong Bar Association has attacked a government proposal to criminalise insider dealing, calling its motives into question. A decision to strip the insider dealing tribunal of its power to impose hefty fines on illicit traders 'has no doubt influenced the Government to criminalise insider dealing', the legal body claims. The Government is seeking to bring insider dealers into the dock on the grounds that other jurisdictions do so. It also claims the Hong Kong market is mature enough for participants to be familiar with the concept of insider dealing. 'These reasons do not justify the criminalisation of insider dealing,' the Bar Association warns in a submission paper. 'It appears that the criminalisation flows more from the decision to remove the present substantial financial penalties . . . than from the reasons stated.' Under the Securities and Futures bill, regulators and legal chiefs will be able to choose whether they wish to pursue alleged insider dealers through the courts or by the civil route, namely the market misconduct tribunal. However, the tribunal will be deprived of its power to impose fines on insider dealers - at present up to three times the profit gained or loss avoided - amid fears that this could violate human rights. The decision has been criticised by lawyers for 'taking the bullet out of the gun'. The Government claims it was advised that developing jurisprudence before the European Court of Human Rights suggests that if a fine is imposed, it may only be imposed on the public at large in a criminal context. Instead, the market misconduct tribunal is to be armed with 'cold shoulder' and 'cease and desist' orders, widely regarded as ineffective deterrents. 'Such change will dramatically alter the effectiveness and deterrent value of proceedings before the [tribunal], especially for insider dealing, one of the most significant and prevalent forms of market misconduct,' the Bar Association says. It also notes that the decision is based on unpublished advice from legal counsel 'who is in all likelihood outside of Hong Kong'. The body has urged the Government to go public with the advice to back up its decision. The association also advocates retaining the financial penalty. Jail terms are not a practical substitute: regulators already have problems gathering sufficient evidence to a criminal standard, for example. Barrister Joseph Pethes, author of the market misconduct section of the association's submission, explained that it could be 'too difficult to develop a case to the required standard'. 'To get proof throughout at a reasonable doubt under the present system would be very difficult,' he said. The association claims: 'There is no evidence that insider dealing has become more prevalent or that the orders imposed by the tribunal have not had an appropriate deterrent effect.' It added: 'Finally, no message will be sent to the market if insider dealing cannot be effectively investigated by the [Securities and Futures Commission] and evidence gathered to the high standard required in criminal prosecutions.' Even the tribunal chairman, Mr Justice Michael Hartmann, cast doubt on the feasibility of criminal sanctions. The judge said that, in his view, these cases would be rare. Mr Justice Hartmann also warned that regulators and the Department of Justice would have to exercise extreme caution in deciding which cases to take to trial. Suspects who made admissions and had no legal representation could be at risk.