Amendment No. 120. There is also an additional amendment on the white list of additional amendments.
SECTION 98.
I move amendment No. 120:
In page 83, subsection (1), line 35, after "to" to insert "the Minister or to".
This is the enforcement section where the Stock Exchange is given the responsibility to enforce, and it provides that if it appears to a relevant authority of a recognised Stock Exchange that any person has committed an offence under this Part, he shall report the matter forthwith to a relevant authority of the recognised Stock Exchange concerned. Deputy Barrett and I are proposing here that the Minister could be able to take this initiative as well, that the right to take an initiative of reporting a matter should not be confined to a member of the recognised Stock Exchange and that the Minister should have a duty to report it as well if he has the information. Therefore, I am proposing after "stock exchange" in subsection (1) to insert "or the Minister", and the amendment should read: "stock exchange or the Minister . . . that any person has committed an offence . . . shall report the matter forthwith. . ..".
This proposed amendment goes to the heart of the new proposals which were introduced during the passing of the Bill through the Seanad to tackle the problem of insider dealing by way of criminal sanction. One of the main reasons the original Bill does not contain criminal sanctions for insider dealing was the massive State resources that would be required to police the enforcement of such provisions. When the Government introduced a series of amendments in the Seanad on this issue it was made very clear that it was not intended that the Minister would become involved in the policing of these sections. At the same time acknowledging the concerns expressed by a number of Senators that the Minister was relying too heavily on the Stock Exchange authorities, section 98 (5) was introduced to give the Minister a residual role where it appeared that those authorities had fallen down on their task. That is as far as we are prepared to go on this and in the circumstances I am afraid I cannot accept the amendment.
All this is proposing is to give the Minister a responsibility to report something to the Stock Exchange if he hears about it. At the moment the only person who has the responsibility under this subsection is a member of the Stock Exchange. It is only in the cases where the Minister actually has information that he would be obliged to report it. It does not oblige him to set up a large information gathering machine; it simply says that where he actually has the information he should have the same obligation to report it to the Stock Exchange as would a member.
We are talking here about a criminal offence. I have no problem about the Stock Exchange reporting to the DPP on somebody who has committed a criminal offence but remember the files can be going to the DPP possibly about innocent people arising from an investigation carried out by, with respect to members of the Stock Exchange, untrained policemen. That also relates back to the points I was making in relation to secton 96. The problem about insider dealing is that you do not know that an offence was committed until afterwards. There is no evidence of insider dealing until maybe three or four days after somebody has bought.
If you want to bring the Stock Exchange in as a police force, they are going to have to gather information. Four days after I or anybody buys shares it might dawn on a stockbroker that, "I should have copped on that the buyer was a friend of so and so and maybe I should have refused to involve myself in that transaction, so I had better report this to the Stock Exchange committee, or the next time I phone I might not get the same sort of treatment". Remember at the end of the day, files will be going backwards and forwards to the DPP's Office who will have to decide on information supplied to him by somebody who was never trained as a police authority. We are talking about criminal law, so I think we should be very careful that what we are doing is fair and reasonable to possibly innocent people.
Why did the Minister not go further on this one than is allowed for in subsection (5)?
We are still dealing with the amendment. We can speak generally on the section.
I was speaking directly to the amendment.
Sorry, are we putting it in or not? I think the merits of leaving it in or out have now been discussed. We can discuss the amendments and then have a general discussion on the section, otherwise we will be just rehashing it when we come to discuss the section, as amended, or whatever.
My query was perhaps a general one, but it was designed to elicit information to enable me to form a view on the merits of the amendment. I can see the merits of self-regulation here and imposing that obligation on the Stock Exchange authority, but I can also see that a reasonable case can be made for the right of the Minister to intervene, especially where he has reason to believe that such intervention is necessary. The sole concession the Minister has made to that is in subsection (5) where he may, on receipt of a complaint, direct the relevant authority to act as if under subsection (1) initially, but I wonder if that is sufficient to the concern that has been raised?
I do not think it is proper that the Minister or his servants be required to supervise the Stock Exchange. I do not think that is correct but, at the same time, where it is believed that the authority is not acting with sufficient urgency or not acting at all on a particular complaint I am not sure that subsection (5) gives the Minister sufficient power to intervene. They are required to make a report, for example, but what kind of report? If the Minister receives a complaint that gives him cause for concern, that a crime may have been committed or whatever, what influence can he bring to bear on the nature of the report that is prepared, and so on? I will be interested to hear the Minister on that.
Deputy Rabbitte was not here earlier when we adequately covered this whole relationship between the Minister, the Director of Public Prosecutions and the Stock Exchange. To be fair, there are provisions and facilities there. We have debated this whole role for the Minister over the last few hours and I have come to the conclusion that the Minister is correct in leaving himself out. If we have come to that conclusion, I think we must follow it through because if you reintroduce the Minister you are going to create a sense of ambiguity and bring the focus back on the Minister's Department. You are going to set up a whole new bureaucracy where people will be approaching the Minister.
Quite frankly, we either agree with the self-policing model or we do not. There is a mechanism there, and we had this debate earlier. You are right, Chairman, in putting the question. We are going over old ground. We are dealing with breaches and I think the self-policing model is the appropriate one. There is a role for the Minister, as he pointed out earlier in the debate.
The subsection states that the Minister may request the relevant authority. The point could be met if the word "request" was changed to "direct". I do not see why the Minister of the day should be obliged to request the Stock Exchange to carry out an investigation. He should have the power within the Act to direct the Stock Exchange to carry out the report and that would cover the point adequately.
I think Deputy Bell's suggestion is constructive but it is not exactly what my amendment is about. I would say to Deputy Kitt that all this amendment is proposing is that if it appears to the Minister that an offence is being committed, he shall report the matter to the Stock Exchange. It is not proposing that the Minister shall report the matter to the Director of Public Prosecutions.
No. It says that the Minister shall report to the Director of Public Prosecutions, not to the Stock Exchange.
I have made a mistake. I thought that my amendment related to subparagraph (ii) of the section.
It relates to subparagraph (i). Deputy Kitt is right because we did debate the whole principle that was involved here as to whether the Minister or the Stock Exchange should do the job and the committee came to the conclusion that the Stock Exchange should do so, not the Minister. If both options are included the only one, in practice, that is going to be used is the Minister. That is all right for the Minister if he has many people to do the work but he has not. We cannot do it. This brings up the whole point; ideally, the DTI in Britain should not be involved. It is alleged at any rate that they are not taking sufficient prosecutions and the Stock Exchange in London apparently would prefer to have this power. It is the same point really that arose earlier.
Would the Minister accept the amendment if it imposed an obligation on him under subsection (2) simply to report the matter if it comes to his notice? In line 45 after "recognised stock exchange" we could insert the words "or to the Minister".
The Minister cannot be expected to put himself in a weaker position than any other citizen. In that sense I would have no great objection to the Minister appearing with the members of the Stock Exchange, in subsection (2) where it is only a request to the Stock Exchange but it is a different matter if you are asking the Director of Public Prosecutions to prosecute.
I am sorry but the amendment I put down was to the wrong subsection. It is my fault. The intention is to impose an obligation on the Minister to report a matter to the Stock Exchange if it comes to his attention.
Obviously, I would have less objection to a reference to the Minister being put in subsection (2) than I would to it being put in subsection (1) but nonetheless it will leave the Minister open as a kind of potential recipient of complaints and unfortunately we would have to appoint people to investigate these matters. This is the difficulty.
It would also place the Minister in the position that he would have to have a fair idea as to how this legislation is operating. On the few occasions that he would be contacted he would have immediate insight into the sort of information that is being passed on. I honestly believe that the Minister of the day should not only depend on the annual report but should, in the interim period, know how this legislation is working both from the point of view of enforcing it and of protecting the innocent.
If I may intervene here the first point that is being raised is the non-interference of the Minister in the day-to-day complaints procedure and secondly, to ensure that the Minister would direct, where appropriate, the Stock Exchange. As it stands at the moment, if a person were to come to the Department of Industry and Commerce saying he wanted to make a complaint to the Stock Exchange, the Minister would simply tell him to go down to the Stock Exchange. If the Stock Exchange do not go ahead and do the job they are supposed to do under subsection (5) the person can come back to the Minister who can make them do it. Therefore, in practical terms, we are keeping the Minister out of the day-to-day procedures but if the Stock Exchange fail, under subsection (5), the Minister shall, where appropriate under the circumstances make a suggestion. Let us not double up the Minister's involvement. He is involved if it comes to the crunch. If someone comes to the Department of Industry and Commerce with a complaint, he is simply sent down to the Stock Exchange. I think that covers the point more than adequately.
I am grateful to the chairman. He has made a helpful suggestion. In order to strengthen the Minister's powers under subsection (5) I would certainly be prepared to go along with Deputy Bell's suggestion of changing the word "request" to "direct".
It is much better.
I hope that will meet the point that everyone is trying to make.
I was just going to make that point. I apologise I was not aware that the committee had reached a conclusion on this matter while I was out. I support the point that Deputy Bell has raised. If subsection (5) is to have the relevance that we want it to have, the Minister ought to have the power to direct if that situation arises.
I think we have come to a constructive conclusion on that.
Perhaps if amendment No. 120 was withdrawn we could make the amendment then in subsection (5).
Before we move on I wish to make one quick point. If somebody comes to any of us as elected representatives and says that a report has gone to the Director of Public Prosecutions about him in relation to a proposed insider dealing and he has solid evidence that he was in no way involved, at the moment, the Stock Exchange has to deal with the Director of Public Prosecutions. The DPP is independent and there is no way of knowing, as a member of the public or as elected representatives, what was in that report. The Director of Public Prosecutions will decide one way or the other. There is no check on whether the policing authority are behaving in a certain way. In any democracy there should always be some way of having a grievance raised. I am talking about a legitimate person who has been accused of something and a file, on a matter about which the person is totally innocent, has gone to the Director of Public Prosecutions.
There is no way of checking what role the Stock Exchange committee will play in this. The DPP will not proceed unless there is evidence. We will not know unless, as Deputy Bruton said, there is a possibility of the Minister intervening in some way to check if the policing authority are performing their role both from the point of view of enforcing the legislation and protecting the innocent. There is no way of doing this.
There is not in ordinary criminal law.
We have a trained police force.
We have a trained police force but I think that the Stock Exchange know more than anybody else about these matters and it is appropriate, therefore, that they are the investigating body. They would know far more about, for example, complicated corporate fraud, than the Garda Síochána would know about it.
Could I just say this much to the Minister. It is a thing one does not want to say but it is the case obviously that there are certain new-comers to stockbroking who cut quite a dash and make themselves rather unpopular with their competitors.
I have heard that alleged but of course, I would not know whether it is right.
It could be suggested, shall we say, that there be greater care taken in combing over their transactions than perhaps others, and this is the type of conflict that does arise as a result of self regulation. That is why I would be suggesting that the Minister take some powers under section 101 for oversight purposes.
I have already agreed to take powers under section 101. I am looking forward avidly to the time when I come to section 101 and can take these powers.
Amendment, by leave, withdrawn.
I move amendment No. 120a:
In page 84, lines 41 to 45, to delete subsection (7).
Essentially the Stock Exchange is getting carte blanche because there can be no legal action against them in the exercise of their function. They, unlike the people they are going to be prosecuting, are to be free of all liability for anything they do. In this amendment I am just raising the question as to whether that should be the case.
The effect of the proposed amendment would be to remove from Part V of the Bill what I see as an important safeguard in ensuring the most efficient operation of the enforcement mechanism we are building in here. The new duty on the Stock Exchange authorities to report cases of suspected insider dealing to the DPP involves the placing of significant new responsibility on what is essentially a self regulatory body, the Stock Exchange. I explained previously what led to the Stock Exchange being given this function. When the exchange carries out investigations and makes its report to the DPP it will be doing so in good faith. As such it will not be exercising a judicial function and will be no more than reporting its conclusions in a particular investigation. It is possible that in some cases the report made by the relevant authority of the exchange will, in the event, not be considered sufficient by the DPP to institute proceedings. Two circumstances could arise where people could be dissatisfied with the activities of the relevant authority. In the first place one could have a party alleging cases of insider dealing but on investigation the Stock Exchange could decide that there was no foundation for the allegation. In such a case the exchange authorities obviously would not submit a report to the DPP. This could leave the person who made the allegation in the first place dissatisfied and might lead him to consider taking an action against the Stock Exchange for exceeding its duty. This subsection provides that the relevant authority would not be held liable for damages in such a case unless the omission complained of was done or omitted in bad faith.
On the other side of the coin one could have a case where the Stock Exchange, following an investigation, does make a report to the Director of Public Prosecutions. The Director of Public Prosecutions, however, may not consider the information sufficient to initiate proceedings. Nevertheless, the party, the subject of the report, may consider that his reputation had been damaged in some way. Such a party could consider taking an action against a number of people but particularly against a relevant authority of a recognised Stock Exchange for having made a report about him which in the event did not warrant the institution of proceedings by the Director of Public Prosecutions. If such a party took an action against the relevant authority of a recognised Stock Exchange this section would ensure that they could not be held liable in damages for having made such a report unless it could be shown they had done so in bad faith.
My overall concern with the amendment is the effect it would have on the attitude of the exchange authorities to the whole question of enforcement. What I mean is this: there is no point in denying that insider dealing will be a difficult offence to tackle effectively and I would not want to put any obstacle in the way of enforcement if I could avoid it.
I would certainly not want the exchange to be over cautious or conservative in their investigations as I feel they would be if this amendment were made. For example, where a complaint is made that a particular person is engaged in insider dealing the authorities will obviously have to ask questions of third parties in order to try to establish the facts of the case. While such authorities would obviously have to be prudent in their approach to these matters I think they might feel themselves powerless to act if there was a chance of their being taken to task legally for doing so. Of course it is arguable that the exchange authorities have this kind of immunity anyway by way of qualified privilege and that it is not necessary to make specific provision for it here. I do not see any drawbacks, however, in making such provision since it has been done elsewhere in law and since it provides a necessary reassurance to the exchange that it is free to carry out its functions under the Bill without fear of counter action by those very people it is trying to investigate.
Having said all that, Deputies Bruton and Barrett tabled an amendment to my amendment, No. 102, which we discussed last week. In that case Deputy Bruton agreed to withdraw the proposal to add the word "negligently" to the new section 88 which we added to Part IV. I agreed to consider before Report Stage the addition of the word "recklessly" or some such similar wording in that case. I did so against the background that this kind of immunity provision is based generally on precedents in other legislation and I would not like to cast doubt on the principles we are legislating for here. I would be prepared to consider a similar addition to the subsection we are considering here but I have to say that I would not be prepared to drop the subsection for the reasons I have given.
I will accept that if we are going the route, more or less, of complete self regulation without any ministerial oversight that it is probably necessary to accept the arguments put by the Minister. I have expressed my reservations about that already so I will not labour the point. I will withdraw the amendment without the matter proceeding.
Can I just get clarification on something? What did I understand the Minister to be saying? Are we adding "negligently" to "in bad faith"?
I undertook on section 88 to consider whether it would be appropriate to add the word "recklessly" and it was a somewhat similar circumstance to this one.
And the Minister is similarly minded here?
I would not rule out that possibility. If it was found appropriate in the other one it might be found appropriate here, too.
Amendment, by leave, withdrawn.
I move amendment No. 121:
In page 84, lines 46 to 51, to delete subsection (8).
Amendment agreed to.
Section 98, as amended, agreed to.
NEW SECTION.
I move amendment No. 122:
In page 85, before section 99, to insert the following new section:
"99.—(1) This section applies where a relevant authority of a recognised stock exchange receives a request for information from a similar authority in another Member State of the European Communities in relation to the exercise by the second-named authority of its functions under any enactment of the European Communities relating to unlawful dealing within the meaning of this Part, whether in the State or elsewhere.
(2) The relevant authority concerned shall, in so far as it is reasonably able to do so, and making use of its powers under this Part where appropriate, obtain the information requested and shall, subject to the following provisions of this section, provide such information accordingly.
(3) Where a relevant authority of a recognised stock exchange receives a request under subsection (1), it shall advise the Minister who, on being satisfied as to any of the matters referred to in subsection (4), may direct the authority to refuse to provide all or part of the information requested.
(4) The matters referred to in subsection (3) are that—
(a) communication of the information requested might adversely affect the sovereignty, security or public policy of the State;
(b) civil or criminal proceedings in the State have already been commenced against a person in respect of any acts in relation to which a request for information has been received under subsection (1);
(c) any person has been convicted in the State of a criminal offence in respect of any such acts.".
Amendment agreed to.