Loss of profit, possible risks to reputation, decrease in stock price… an endless list on the impact of insider dealing and market abuse. Whilst cybersecurity risks may be a contributing factor, a company may find itself in jeopardy as to its financial position should such insider dealings persist.
In Mauritius, the Securities Act 2005 identifies the specific offences – insider dealing, false trading in securities, market rigging, fraud involving securities and false or misleading conduct. The Financial Services Commission (FSC) and the Stock Exchange of Mauritius are embodied with certain powers which allow them to take actions against an individual and/or legal person. Most importantly, the Financial Services Act 2007 gives the FSC wide powers such as the power of interview, power of search or power to compel disclosure and power to obtain evidence.
For the purposes of investigation, the investigator, who is authorised by the Chief Executive of the FSC, has the power to:
- enter any premises, at any reasonable time, used or has been used by the licensee for business purposes;
- search for any document or any other thing that is incidental to the investigation and which is also relevant to the investigation;
- administer oath, affirmation or declaration;
- seize any document (including electronically stored information), article or other thing and/or object that is incidental or relevant to the investigation;
- summon any licensee, or its officers, employees and associates, or any witness necessary for the conduct of the investigation.
After completing the investigation, the investigator must submit his report to the Chief Executive of the FSC and if, on application by the FSC, the court finds that a person has committed an act of insider dealing, the court may make an order requesting payment to the FSC of an amount to be determined by the court. The court may order a maximum amount which is equal to the amount found by the court to be the amount of profit that may have been realised or loss avoided by the offender because of the offence. The amount recovered goes into a compensation fund to compensate investors who suffered a loss by the insider dealing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.