The next amendment is No. 123. No. 124 is an alternative to the Minister's amendment. Is it agreed to discuss both amendments together? Agreed.
SECTION 99.
I move amendment No. 123:
In page 85, lines 1 to 3, to delete subsection (1) and substitute the following:
"99.—(1) In this section and sections 100 and 101, ‘authorised person' means a person approved by the Minister to be an authorised person for the purposes of this Part being—
(a) the manager, however described, of a recognised stock exchange, or
(b) a person nominated by a relevant authority of a recognised stock exchange.".
To enable the Stock Exchange authorities to establish the information on which they might base any referral of suspected insider dealing cases to the Director of Public Prosecutions it is necessary to give them the power to appoint authorised persons and that is basically what section 99 does. We obviously do not want particularly to tie the hands of the Stock Exchange authorities as to whom they might appoint as authorised persons to do the necessary investigation of suspicious cases.
For my part I want to make sure that the procedures we are putting in place here are capable of working in practice. In this connection it struck us that there might be cases where the full-time manager of the Stock Exchange wishes to investigate something without the need to actually appoint someone else to do the investigating. Under the current text of section 99 (1) it would not appear that he or she could actually do that. Amendment No. 123 aims to correct this defect by specifically allowing the manager of a recognised Stock Exchange to act as an authorised officer without the need to be specifically authorised in each and every case. The adoption of this amendment would not, of course, alter the fact that such a manager would still have to be a person approved by the Minister for the purposes of Part V of the Bill.
Turning to the amendment tabled by Deputies Bruton and Barrett which is being taken with this, the effect of this would be to preclude a member of a recognised Stock Exchange, in other words a licensed stockbroker, from being appointed as an authorised person. I have to say when this particular part of the Bill was overhauled in the Seanad a lot of thought was put into the kinds of practical mechanisms which ought to be provided for in order to make these particular provisions work. While I accept that a total outsider may be able to do just as satisfactory a job in this respect as someone closely involved with Stock Exchange affairs, I think that given the insidious nature of the offences we are dealing with here and the difficulty in ferreting out evidence that would justify legal proceedings, members of the Stock Exchange may well turn out to be the people best qualified to act as authorised persons. They are, after all, the ones with the main expertise and experience in the area of share dealing and I would have thought would be better aware of what to look for in investigating the abuse concerned.
Indeed, the fact that the Stock Exchange authorities were to be given a central role in policing these provisions was one of the main reasons why the Government were happy to change tack on Part V and make insider dealing a criminal offence. At this stage, therefore, I would be loath to prevent any particular person or class of person being appointed as an authorised person particularly since the Minister has the final say in approving such people anyway. In all the circumstances I am afraid I cannot accept the Deputy's amendment.
I see a certain conflict in allowing stockbrokers to investigate other stockbrokers in the sense not only will it be the Stock Exchange that will be doing the investigation but the officers they will be using to do the leg-work will also probably be stockbrokers. I have already said these stockbrokers are people who are in competition with one another. If somebody is appointed to investigate somebody who has been a commercial rival over a number of years it creates a conflict of interest. It is not desirable to have stockbrokers involved as the authorised person. It would be probably more appropriate if the Stock Exchange were to employ, either on a contract basis or permanently, some specialist investigator who was not a member of the club precisely. Given that we are giving the Stock Exchange more or less the power to do the job, we should at least say that they should not use members as policemen.
My amendment allows the full-time manager to act. In practice, he will probably be the person who does most of the investigation. He is not a stockbroker.
In practice he will be investigating his employers.
His employers are the Council of the Stock Exchange and the Council of the Stock Exchange will be giving him full backing to investigate the insider dealings by some individual.
——who may also be members of the Council. There are not that many active stockbrokers in Dublin anyway and the Council of the Stock Exchange is a large body with a fair cross-section of stockbrokers in it. So you are going to have a situation where conceivably one member of the Council will be investigating other members of the Council. It is a bit bizarre.
Yes, but the Deputy is proceeding on the assumption that every investigation of insider dealing will be into the activities of a stockbroker. I would imagine that only a very small minority of those investigated will actually be stockbrokers.
Section 96 is bound to involve a stockbroker who carried out the purchase of the shares. They are bound to come into it because we have brought in section 96 now.
No, it does not necessarily involve the stockbroker at all. The stockbroker may have no reason whatever to be suspicious about the thing; 95 per cent or, perhaps, 98 per cent of the investigations clearly will not be into stockbrokers at all.
May I suggest, in order to meet both points, in paragraph (b) of the Minister's amendment if you were to stop after the word "authority" and delete the words "of a recognised Stock Exchange" that would meet both points; in other words, that the Stock Exchange could effectively appoint a qualified person nominated by them to carry out the investigation, not necessarily a member of the Stock Exchange.
Our amendment would exclude a member of the Stock Exchange from being an authorised member.
What I am saying is that if you stopped after the word "authority"; put a full stop there and deleted the words "of a recognised Stock Exchange" it would meet both points.
I do not think it would, really.
Relevant authority is defined in what was described as amendment No. 111. It is in section 90. It has gone in there and it is either the manager or the board of directors, committee of management or other management body. I think in Dublin it is called Council, if I am not mistaken. I think in principle it would be wrong to exclude stockbrokers. The vast majority of the investigations will not be into other stockbrokers. There may be an odd one but I am sure it will be possible to find a stockbroker who could conduct an investigation into another one. It would be a bit unfair to them to say that they cannot do that.
May I make a suggestion. Would it be possible where an offence under section 96 is suspected, involving a member of the Stock Exchange, that the authorised officer in that circumstance should not be a stockbroker.
It could be very difficult. It could involve both parties.
Deputy Bruton is wrong because there will not be an investigation into an offence under section 96. The investigation would be into an unlawful action under section 91.
It says a person who contravenes this section——
The DPP would normally do it.
It would appear from the Minister's amendment that the most likely person to be nominated would be the manager who is not a member of the Stock Exchange. Is that correct?
That is right.
Therefore, I do not think there is any great conflict between the two amendments, other than that our amendment is more specific. I do not think you will have a great deal of hassle as a result of that but also in other cases it allows for more flexibility in the event of a particular investigation because the authorised person does not have to carry out every single investigation. Could you not have an authorised person for a particular investigation?
Yes.
That would cover the point made by Deputies Bruton and Bell.
What I cannot accept is the principle underlying Deputy Bruton's amendment which would be to exclude stockbrokers entirely from carrying out investigations under the Act. The number of times there would be an investigation into a broker will probably be relatively small, the vast majority of them will be into dealers — people who had dealings.
I think I have a solution for you — you are not a member of the Stock Exchange unless approved by the Minister.
They all have to be approved by the Minister.
If the Minister wants to appoint a member of the Stock Exchange, he would have to approve it.
I have to approve it anyway. Read the amendment:—
In this section . . . "authorised person" means a person approved by the Minister to be an authorised person for the purposes of this Part being—
(a) the manager . . .
(b) a person nominated . . .
But it gets across the point——
We should have an understanding that if it is an investigation into a broker, the Minister would not approve of the appointment of a broker to do that.
That gets over the point. If you accept our amendment, it will read, "authorised person not being a member of a recognised stock exchange" means a person authorised in writing . . .
Could that not rule out a number of other situations where a broker as well as the person being investigated could be involved? An investigation could start out into a particular purchaser of shares and it could subsequently emerge that he was doing so in collusion with a stockbroker.
There is a danger in that. I do not want to agree to something like this too readily for all the wrong reasons. This would be into the barrow of a devious or improper stockbroker. The one type of person he would not want investigating him is another stockbroker. They would spot what he is up to far more readily. If there are stockbrokers who are less than 100 per cent — I am not saying there are — the most effective person to lead a committee of investigation is another stockbroker.
Could I make a suggestion? The Minister has pointed out quite reasonably that any appointment here must be approved by him. He has given a general indication that his policy would be not to appoint stockbrokers but he is now qualifying that. Could I suggest that he might consider putting in an amendment to this section to say something to the effect that, in approving appointments under this section, the Minister shall take account of the need to avoid potential conflicts of interest in the exercise of their responsibilities by authorised officers. That would be meeting the point I am trying to get at without being as rigid as my amendment.
We will try do do something on those lines. I take your point and I fully appreciate it, up to a point. I think there is something of a paradox here. Irrespective of what the view may be out there that stockbrokers will look after one another and all the rest of it——
I understand your point.
The most effective investigator of one of them, if he is acting improperly, may well be another one.
May I give notice that I will consider putting down an amendment on Report Stage to require the Minister to take account of possible conflicts of interests?
Perhaps the Minister might consider the matter himself in the meantime.
I will.
Amendment agreed to.
Amendment No. 124 not moved.
Section 99, as amended, agreed to.
Would the committee be good enough to agree to take the last two sections so that we could finish Part V today?
Is that agreed?
We were suggesting an amendment to section 101 and we would like to know what sort of amendments the Minister is going to accept under section 101 before we agree to terminate the discussion today. If the Minister is coming up with something that is sufficiently strong to give him the general oversight of the self-regulatory activities of the Stock Exchange, then we might be prepared to accept that. If not, we might want more time.
What I had in mind in relation to section 101 is that instead of confining the power to make supplementary regulations as they are described here under sections 98 and 99 in respect of the powers of authorised persons in the matters and in respect of which the persons from whom authorised persons may require information, I would withdraw subsection (1) and substitute a broader power giving the Minister power to make regulations under Part V which would enable him to make amendments if necessary to the proper and effective administration of Part V rather than just the proper and effective administrations of sections 98 and 99.
Yes.
That, I think, should be broad enough. At the same time it would not allow the Minister to change the substantive law which he should not be able to do except by legislation.
Will we go ahead with those two sections on that basis?
How much time have we got?
We have gone over the time.
Could we dispose of it in ten minutes?
Yes, because basically what the Minister has put in can be discussed on Report Stage. He has given the principle of the proposed amendment which basically gives him powers to bring in regulations for the whole of Part V.
NEW SECTIONS.
I move amendment No. 125:
In page 86, before section 100, to insert the following new section:
"100.—(1) Information obtained by any of the following persons by virtue of the exercise by a recognised stock exchange of its functions under this Part shall not be disclosed except in accordance with law, namely—
(a) a relevant authority of the exchange,
(b) an authorised person, or
(c) any person employed or formerly employed by the exchange.
(2) Subsection (1) shall not prevent a relevant authority of a recognised stock exchange from disclosing any information to the Minister, whether pursuant to a request under section 98 (5) or otherwise, or to a similar authority in another Member State of the European Communities.
(3) Any person who contravenes subsection (1) shall be guilty of an offence.".
There are two small amendments, Nos. 125 and 126, in my name.
They have already been discussed. We have agreement to finish this Part and we can do it fairly quickly.
Amendment agreed to.
I move amendment No. 126:
In page 86, before section 100, to insert the following new section:
"101.— The provisions of Schedule C.5 (a) of Council Directive 79/279/EEC of 5 March 1979* coordinating the conditions for the admission of securities to official stock exchange listing, as given effect by the European Communities (Stock Exchange) Regulations, 1984 (S.I. No. 282 of 1984), shall also apply to securities within the meaning of section 90.".
*O.J. No. L66, 16.3.1979, p. 21.
Amendment agreed to.