Insider traders used to have it easy. They might suffer a slap on the wrist at a civil misconduct tribunal; at worst, a fine or a professional disqualification. Even when authorities won the right to pursue cases through criminal courts, prosecutions were exceptional events.
That is now changing. Cases and convictions are mounting – the result of years of one-upmanship from market watchdogs, competing to prove they are the toughest of them all. Hedge fund GLG Partners just lost an appeal against the French market regulator for insider trading in Vivendi shares. The UK's FSA has one criminal trial under way, with perhaps another four to follow this year. Hong Kong this week saw its first criminal prosecution. An ex-BNP Paribas banker now faces up to 10 years in jail – and a fine of up to $1.3m – for tipping off friends and family about an upcoming buy-out.
As the furore over bankers' pay demonstrates, this is a good time to be pursuing white-collar scoundrels. But to what extent the increased zeal of regulators will create cleaner markets is debatable. Miscreants can still escape detection by lurking behind nominees, offshore companies and other proxies. Volatile markets can mask all kinds of skulduggery. Proving intent, beyond reasonable doubt, remains tough.