Research Analysts and the Australian Market Misconduct Regime

Abstract

This article argues that both the front running of research reports and the distribution of inside information via research reports are prohibited by the current Australian insider trading regime. Publication of research reports that do not reflect the views of the person or firm that published it would at least prima facie be misleading or deceptive within the meaning of section 1041H. A limited reasonable basis obligation can also be drawn from the case law on misleading and deceptive conduct. The paper also identifies some implications for future Australian law reform in the area of Chinese walls and a positive reasonable basis obligation, concluding that Australia is in some ways a number of years ahead of comparable overseas regimes in its regulation of research analysts.

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