An Analysis of the Market Abuse Prohibition Enforcement in the United States of America

Abstract

The United States of America (the US) has developed one of the most progressive and effective anti-market abuse enforcement frameworks in recent years. For example, at a federal level, its anti-market abuse enforcement framework involves self-regulatory organisations as well as private actions that enhance compliance with the law and facilitate the levying of sanctions against offenders. Put differently, rigorous enforcement is the key component of the US’s market abuse regulation that makes it unique from similar regulation in other countries. Consequently, the US’s anti-market abuse enforcement approaches have influenced the regulation of market abuse in a number of countries, including South Africa. Given this background, the detection, prosecution and enforcement measures adopted in the US will be briefly discussed and, where applicable, contrasted with similar enforcement methods in South Africa in order to recommend possible anti-market abuse enforcement measures that could be employed to increase the curbing of market abuse activities in South Africa. This is done by, first, examining the role of the United States Securities and Exchange Commission (the SEC) in relation to the enforcement of the market abuse prohibition in the US. Secondly, the role of the Department of Justice and the courts in relation to the enforcement of the market abuse ban in the US will be analysed. Lastly, a similar analysis in respect of other selected self-regulatory organisations will be undertaken.

DOI: 10.5901/mjss.2014.v5n7p188