Insider traders and market abusers could be jailed for up to two years after Government moved to tighten up laws regulating white collar crime.

On Friday Finance Minister Paula Cox tabled legislation in the House of Assembly to empowering the courts to convict those found guilty of insider dealing and market abuse in the securities industry.

The legislation was drafted after a KPMG review of Bermuda?s financial regulations found weaknesses in the law.

Although some jurisdictions ? in a bid to crack down on these kinds of abuses, which were said to be difficult to successfully convict ? have added civil law offences to the standard criminal ones, Ms Cox said the intent in Bermuda for the time being was to limit this to the introduction of criminal offences.

But civil law offences could be introduced if serious concerns are raised in future over the effectiveness of criminal sanctions, Ms Cox said in a Press statement on Friday.

?This is an important area of weakness in the framework of Bermuda?s investment and securities legislation,? she said.

The new legislation amends the Criminal Code 1907.

Insider trading was defined as when a person dealing in securities or investments has access to non-public information, and acts on that information in a way that is likely to have an effect on the value of the security. A person can be guilty of this offence by trading in the ?affected securities for their own profit or passing on information enabling others to do so?, Ms Cox said.

Market manipulation ? defined as conduct intended to give a misleading impression about the level of supply, demand for, or the price of value of a security, resulting in a false market ? will also become a criminal offence.

Although Ms Cox said Bermuda already had the ability to deal with these kinds of abuses through rules binding licensed investment businesses and members of the Bermuda Stock Exchange, the new legislation strengthened public laws to deal with this kind of activity from any person.

?Bermuda does not have a history of extensive trading activity in its local markets and, as a result, there is limited evidence of widespread abuse of this kind,? she said.

?However, legislation of the type proposed can be expected to add to the well-being and general development of Bermuda?s markets through promoting their transparency and efficiency.?

Bermuda?s legislation for prosecuting insider dealing was said to closely follow legislation already in effect in the UK under the Criminal Justice Act 1993.

A number of general statutory defences are to be included in the amended legislation that will guard against someone being found guilty of insider trading if they did not appreciate the price sensitive nature of the information they had, or if it was believed on reasonable grounds that the information was already widely disclosed, or if having the information did not affect one?s dealing of the securities.

In the case of market abuse, Bermuda?s legislation was said to be similar to provisions under the UK Financial Services and Markets Act 2000.

Ms Cox said she expected this bill to be introduced in the House, debated and passed before the end of this Parliamentary session, with MPs recessing before the end of the month.

She said expectations were that the bill, once passed, would take effect on November 1, 2004.

Under the new legislation, those convicted of insider trading or market abuse could be subject to imprisonment for a term ranging from six months to two years or a fine ranging from $10,0000 to $100,000.