Difficulties in the criminal prosecution of insider trading—A clinical study of the Bekaert case

If the enforcement of insider trading prohibition is of crucial importance to ensure the integrity of financial markets, then the current criminal prosecution in Europe fails in reaching this goal. This article illustrates several difficulties in prohibiting and prosecuting insider trading by using a clinical study of the Belgian industrial company Bekaert, NV. It is shown that courts currently seem to lack knowledge of the functioning of financial markets to assess an insider trading case. Therefore their decisions give little guidance to future litigants. Using, a law and economics framework, this clinical study is clarifying in several aspects compared to a traditional legal analysis. The analysis focuses on two aspects of an insider trading case. First, the price-sensitive character of the information is examined. Second, the standard of proof is examined. JEL classification G14 · K22 · K42