Economy

Insider dealing: Tougher rules key to bringing financial markets under control

Published

13 years ago

September 10, 2013

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Insider dealing and market manipulation might have made some bankers rich, yet they have also undermined the stability of the financial system. In many cases taxpayers’ money has been used to bail out banks that took too much risk in their drive for profits. On 10 September, MEPs will first debate and then vote on tougher rules to prevent market abuse. Arlene McCarthy (pictured), who wrote the report, says that this is a key step in bringing financial markets under control.

Insider dealing occurs when people use information not available to the wider public for trading for their own profit. An example would be buying the stock of a company on inside information that the company in question will be a takeover target. When such information is communicated to the market, the share price of the company usually shoots up and those who own shares in it profit.
"There is still much to do in restoring the trust and confidence in banks and the financial services industry," said McCarthy, a British member of the S&D group. "We must get the real economy moving again and make sure consumers are protected in the financial services sector."McCarthy and the Parliament are also working on a directive that proposes criminal penalties for those involved in market abuse.

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