Russian insider trading laws to act as "sword of Damocles"

17 December 2008

New insider trading laws set to be introduced by Russia in the new year will act as the "ultimate sword of Damocles" for professionals, deterring wrongdoing with the threat of criminal sanctions, an expert has said.

Sergey Voitishkin of international law firm Baker & McKenzie told Russia Today that the draft proposals would bring "discipline" to the country's exchanges and prevent insider dealing before it starts by making people "think very carefully" about the consequences.

However, Oleg Vyugin, who spent three years as Russia's chief financial regulator trying to reform the rules on insider trading, told the site that despite the backing of prime minister Vladimir Putin, the new proposals face continuing opposition.

Mr Vyugin, who now serves as chairman of MDM Bank, claimed the majority of insider trading in Russia is conducted by bureaucrats who profit from official information before it becomes public - and they have the power to block the proposed laws.

He said government ministries had shown "huge resistance" to the introduction of criminal sanctions for insider dealing.

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