Mijat Jocovic

PROHIBITED ACTIVITES IN INSIDER TRADING CASES

In this paper, the author has analyzed the prohibited activities in insider trading cases. The main assumption is that the precise definition of all the elements of insider trading is a prerequisite for effective sanctions for misuse of privileged information. After explaining the importance of regulation and sanctioning of insider trading, the author has described and explained the prohibited activities in cases of misuse of privileged information. The author emphasizes the fact that in comparative law in the past decade often happened that the lawsuits are rejected where the obvious abuse of insider information exists. The reason is often found in the fact that the legal sources are not accurately listing all prohibited insiders’ activities, or when given, are not precisely defined. The aim of this paper is to highlight the types of prohibited activities and the ways to precisely define and sanction the same in comparative law and practice.

The main conclusion which the author made, during the research and writing of the paper, is that in the last decade has witnessed an evolution in the development of this institute. Professional investors, whose main activity is based on the profit made by privileged information, are replacing classic insiders, directors and other employees in companies. In contrast to the insiders of the seventies, who naively used privileged information without a detailed plan for the avoidance of law enforcement or adequate legal defense, the above mentioned categories are much more cautious and better trained for insider trading actions, so that their behavior around the world has the character of organized crime. Therefore, comparative laws devote considerable attention to the precise definition of the prohibited activities in cases of insider trading.

Keywords: insider trading, prohibited activities, insiders, privileged information, judicial practice.