Outer Temple Chambers

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SAC Capital in the dock for insider trading: could it happen here?

By Robin Barclay

Last week’s announcement that the US Department of Justice (DoJ) has charged a company, SAC Capital, with criminal insider trading has left the global hedge fund and banking industry reeling. Hot on the heels of the FCA corporate LIBOR scandals, the decision to charge a company with insider trading in the US raises the question: could the FCA charge a hedge fund or bank with the crime of insider dealing here?

At first blush the answer is ‘no’, owing to the fact that the offence of insider dealing, as created by s.52 of the Criminal Justice Act 1993, applies to individuals and not companies. On this basis, so far as principal offenders go, hedge funds and banks cannot be indicted because that was Parliament’s intention.

What about their corporate criminal liability as accessories or secondary parties? S.8 of the Accessories and Abettors Act 1861 provides: ‘Whosoever shall aid, abet, counsel or procure the commission of any indictable offence, whether the offence be at common law or by virtue of any act passed or to be passed, shall be liable to be tried, indicted and punished as a principal offender.’ In short, as insider dealing is an offence by virtue of the Criminal Justice Act, in an appropriate factual situation a company may be liable as a secondary party for insider dealing committed by an employee…

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