The Insider Trading Implications of Directors’ Margin Loans

The use of margin loans by directors of listed companies to acquire shares in their own companies raises a number of important issues, not least of which are the insider trading implications. This topic has been the subject of a significant focus this year, primarily due to the release of an Issues Paper and Report on Aspects of Market Integrity by the Corporations and Markets Advisory Committee in response to a ministerial request. This article discusses the relationship between insider trading and directors' margin loans, analyses the current state of the law in the context of relevant commentary and law reform proposals, and proposes alternative mechanisms to address the complex underlying issues in light of the current policy focus