Circumstantial Evidence to Prove the Elements of Insider Trading in Malaysia and Australia

Abstract

Insider trading, although might profit the offender himself, it nevertheless brings more harm to society than its benefits. Several elements need to be proved before a person can be convicted under insider trading. As this is not a strict liability offence, the elements of mens rea need to be proved and it is quite difficult to prove it by using direct evidence. Therefore, indirect evidence is produced before the court to charge a person with insider trading. This raises a question whether it is reliable and sufficient to hold a person liable under this offence. The objective of this research is to examine whether the circumstantial evidence may be accepted by the court in cases involving insider trading and to analyze how circumstantial evidence helps the court to decide the mens rea by deducing it from the offender’s behavior at the time of the commission of the offence. Qualitative methodology using primary sources such as statutes and cases is used to analyze the application of circumstantial evidence by the courts while secondary sources referred to are academic books and articles. It is found that most of the judges accepted circumstantial evidence to prove the elements of insider trading. It helps the court to understand the state of mind of the offender, decide who is an insider and determine the type of information whether it is material and generally available to the public. This research suggests that circumstantial evidence is necessary to assist the courts in the cases.