New laws to stop rogue stockbrokers

NEW laws to prevent insider dealing and protect investors from unscrupulous stockbrokers came into force yesterday.

The EU’s Market Abuse Directive was signed into Irish law yesterday in a bid to ensure that consumers are not taken in by financial advisers attempting to manipulate share prices and are not misled by brokers distributing investment advice.

In Ireland, stockbrokers, execution-only dealers, or anyone trading in listed securities will have to monitor suspect transactions and report any incidents. For the first time, suspicious trading in equities across Europe must also be reported to financial regulators.

Listed companies will have to maintain detailed lists of individuals with access to confidential information that would affect their share price.

Trade Minister Michael Ahern said: “These regulations will contribute to the harmonisation throughout Europe of the rules against market abuse, reinforcing market integrity and increasing investor confidence in the financial market.”

Stockbrokers who produce equity research will have to make disclosures of any dealings with the companies they are making recommendations on and ensure that the research is balanced and accurate. Share tipping in newspapers will also be subject to the laws on accuracy and balance.