Authorities to Amplify Penalties for Insider Trading Twofold
In a significant move to curb insider trading and ensure a more stable investment environment, new regulations are being introduced in Russia. These regulations, according to analysts, are expected to improve whistleblower protection, making it easier for insiders to report violations like insider trading. The new laws will also enhance the legal safeguards against retaliation, providing a safer avenue for those who wish to expose wrongdoing.
The stricter compliance obligations imposed on companies under these new regulations will require them to adapt their internal processes promptly. This is a welcome development, as it will help to prevent insider trading and other related activities that can destabilise the stock market today.
The fight against insider trading is not a new concept in Russia. Several years ago, Profile reported the first high-profile case of insider trading in Russia, initiated by the Central Bank against three employees of AFK "System".
Insider trading manipulations often target low-liquidity assets, as reported by analyst Dmitry Lezhnev. A classic example of such manipulation involves a manipulator preemptively purchasing a low-liquidity asset, then spreading information to encourage other investors to buy. This results in a sharp price increase, followed by a quick drop in asset value, leaving other investors with losses.
Vladimir Chernov from Freedom Finance Global believes that defeating insider trading would make stock prices less susceptible to fluctuations, leading to a more stable market. This, in turn, would reduce risks for private investors, providing them with a more predictable and reliable investment environment.
The implementation of these new regulations is a positive step towards fostering trust and confidence in the Russian financial market. As the regulations take effect, it will be interesting to see how companies adapt and the impact these changes will have on the market's stability and overall investment climate.
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