ISE review likely after Fyffes case

The Government will review the regulation of the Irish Stock Exchange, following the completion of the insider dealing court case taken against DCC and Mr Jim Flavin by Fyffes.

The Minister for Enterprise, Mr Martin, said he would review the issues raised in the case and emphasised that organisations needed to make sure everything was "kosher" in their sector if they wanted to avoid regulation.

The Stock Exchange is unusual in the financial world for being in charge of its own regulation under law. The Irish Financial Services Regulatory Authority (IFSRA) has a role in approving the establishment and rules of exchanges but does not regulate them.

The role of the Stock Exchange in investigating market irregularities was highlighted last week in a Supreme Court hearing linked to the Fyffes/DCC High Court case.

The Supreme Court heard how DCC initiated a campaign in 2002 to get the assistance of the Stock Exchange in subverting an insider dealing inquiry.

The strategy was devised by DCC's advisers and was discussed with Mr Tom Healy, chief executive of the Stock Exchange.

"Ultimately, self-regulation depends on the sector that you are in because you do require in-sector expertise," Mr Martin said last night.

"But you have to have a certain degree of arm's length activity and the composition of any regulatory authority has to guarantee independence and genuine vigilance and vigour in regulation."

The Minister was speaking in Shanghai, where he is participating in the Government's current trade mission to China.

Asked if he was concerned at the recent developments in the DCC/Fyffes case, Mr Martin said he could not comment directly on the matter. But he added: "You can take it that we will review the situation in the aftermath of this particular case when we see the issues that have been thrown up to date and what the outcome of the case will be."

The process of investigating alleged insider trading has changed since the Stock Exchange forwarded a report on DCC and Fyffes to the Director of Public Prosecutions in 2002. This report would now need to be sent first to company law watchdog, the Office of the Director of Corporate Enforcement (ODCE).

The director of corporate enforcement, Mr Paul Appleby, said this week that, while he would expect company law to be reviewed generally in light of the conclusion in the case, he would not imagine that the Government would react quickly to allegations made while it is progressing.

The rules governing insider trading are due to change further over the next few months when an EU directive on market abuse is transposed into Irish law. This law will give IFSRA a more direct role in handling allegations of insider trading.

Mr Martin said many business lobby groups were telling the Government not to go "so heavy on regulation". This means there is a strong onus on them to make sure everything was "kosher" in their industries, he added. However, Mr Martin said he was aware of the fears of companies about proposed new regulations currently under consultation with the ODCE.

"I am conscious that when you go the foreign direct investment route in the US, what the companies say is that they like the Government's agility to get things done in Ireland and that they are not over-regulated like in mainland Europe," he said.