ISC Takes Aim at Insiders

Earlier this month, the Iraq Securities Commission (ISC) announced that it would be moving against violations of its Regulation 16, which covers insider trading. Effective July 1, the Commission threatened to bar violators from trading and to cancel their trades.

Regulation 16 defines insiders as including members of a company’s board of directors and their advisors, upper-level managers, auditors, and others with knowledge of “substantial events” that may “affect the stock price upon their announcement.” Insiders are prohibited from trading prior to the announcement of results and other potentially market-moving news and from leaking insider information before it is made public.

The ISC’s renewed focus on this issue is part of a wider effort to bring the ISX closer to international best practices. (See this post.) It is also a logical complement to recent rule changes that have shortened the suspension periods for companies having capital increases. Where the former approach seems to have been to prevent insider trading by suspending trading altogether, there now appears to be an effort to prevent insider trading by taking aim at the insiders themselves.

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