Combatting Insider Trading in Tanzania: The Adequacy of the Capital Markets and Securities Act of 1994 and the Companies Act of 2002

Abstract

Sub-Saharan African countries have been continually searching for opportunities to transform their economic fortune. Among the central components for the envisioned transformation is the development of viable securities markets. These countries envision that the increasing demand for domestic and foreign capital can be satisfied by robust securities markets in terms of operation and control of insider trading practices. However, this objective may not be attained where the securities business is fouled with insider trading practices without adequate legal regime to counter such practices. In this era where the Tanzanian capital market is exposed to international investment and the need to boost its economy, regulation of such market in terms of insider trading practices is of utmost importance. This article is aimed at analysing the adequacy of the Capital Markets and Securities Act of 1994 and its regulations in combating insider trading practices for companies listed in the Dar es Salaam Stock Exchange. From the discussion in this article, it is clear that the legal framework on insider trading in Tanzania is characterized by gaps, duplications, and ambiguities. At the end of the article it is concluded that, such legal regime is not adequate in combating insider trading practices in the stock market in Tanzania, thus amendment of the law is considered necessary. This work intends to shed light on insider trading and the importance of regulation for such offence.