Ethics Newsline®

Special to Newsline from Canadian correspondent Errol P. Mendes

TORONTO
A report of a taskforce formed by Canadian securities regulators indicates that Canadian banks, law firms, and accounting firms advising Canadian companies on corporate takeovers are lax on preventing leaks of confidential information about the deals.

According to a Globe & Mail report, the taskforce concluded that this lax approach results in widespread insider trading on shares of Canadian companies.

The report also found that these professional firms do not have requirements in place to contain insider information that bankers, lawyers, and accountants learn about their corporate clients.

The taskforce was established by Canadian securities regulators to inquire into the perceived increase in illegal insider trading in Canada.

There were 289 insider-trading cases handled by Canadian securities regulators in the 2001-2002 period. However, there have been only a few successful prosecutions in these cases.

The taskforce also recommended that regulators of equity and derivative markets around the world coordinate their investigations of insider trading and share information.

The report also recommended that the Canadian federal government set up a special white-collar crime section focusing on illegal insider trading.