In my post of last week, I argued that we don’t need more financial regulations, but instead need better enforcement of the existing regulations.
As if immediately demanded, arrests have been made in an insider trading ‘ring’ by the FSA and SOCA. The BBC reports here. It seems that the staff of three major firms have been arrested, suggesting that this was quite an organised group. But as recently discussed in this blog, there is a lot of money involved in insider deals, so why not be organised?
Hopefully, this will act as a deterrent to others, but that is difficult to imagine. Heavy punishment will act as the real deterrent…
It seems that a very real hope to clear up the problems in financial markets will be to clean up the standards of behaviour by the participants. This, of course, means cleaning up their personal and professional standards. By taking a much firmer line on insider deals and the way that bonus culture drives their greed, it may become possible to remove some of the systemic risk that haunts markets when short-term decisions put long-term survival in danger.
What do you think? Do you have opinions about the bonus culture in investment banks or insider trading and market regulation?