Those who make the law may break the law? A comparative review of the application of insider trading laws to lawmakers in the United States and Australia

Allegations of insider trading by Members of Congress receive significant attention in the United States, yet in Australia, such allegations involving Members of Parliament are much less frequently made. In this article, we aim to understand this phenomenon by comparing the laws prohibiting insider trading and their application to lawmakers in both jurisdictions. Through this comparison, we conclude that the regulatory regimes in both countries may be theoretically adequate to prohibit lawmaker insider trading, but it appears that lawmakers may still engage in insider trading. We identify obstacles that prevent effective detection and enforcement of insider trading in both the United States and Australia, namely, lawmaker immunities and inadequate financial disclosure rules. To better prevent lawmaker insider trading and maintain trust and integrity in both securities markets and political probity, we propose reforms to financial disclosure obligations and the establishment of Parliamentary Privileges and Congressional Ethics Committees.