To punish, publish
THE prescribed treatment for insider trad- ing is to bring it out. Better to treat it not as a possible infringement of some section of the criminal law, but as a possible offence against standards of honest conduct and fair dealing, the Securities and Investments Board has shown the way — setting out to have the City rulebooks rewritten, so that every rule can be seen to derive from ten Principles, cast in terms that a child would have learned at a Victorian Sunday school. A breach of these principles will be a breach of the rules. There are various sanctions and powers of discipline, but the most effective sanction is exposure. A man who is shown up in his business dealings as less than honest and fair will bring other punishments down on his head. He and his employers, actual or prospective, will have their reputations on the line, and nowadays their licences, too. In the days when the City was a club, it had the sanctions of a club — to reprimand, to ostracise, to expel, to blackball. They were powerful, but their limitation was that everything happened behind the club's closed doors, with no names named outside. The rule must now be: to punish, publish.
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