The Federal Government wants to crack down on insider trading and other market-related offences by stiffening penalties and beefing up investigative powers for the Australian Securities and Investments Commission (ASIC).

Financial Services and Corporate Law Minister Chris Bowen says the Government will release an exposure draft of the proposed changes later this year.

He says penalties in the Corporations Act for the offences of insider trading, market manipulation, false trading, market rigging and making false and misleading statements provide insufficient deterrence, as the gain from engaging in market misconduct often far outweighs the penalties imposed for a breach.

Under the proposal, the penalty limits for individuals would jump from $22,000 (or $220,000 for insider trading) to $500,000 or three times the profit made or loss avoided by the conduct that constitutes the offence.

The maximum penalty for a corporation would be increased from $1 million to $5 million, three times the profit made or loss avoided, or 10% of the annual turnover of the corporation in the relevant period.

Maximum prison terms for individuals would double from five years to 10.

Under an upgraded surveillance regime, ASIC would be allowed to wiretap telephone calls using court-issued warrants.

Mr Bowen says he has confidence in a strengthened ASIC in the face of recent unsuccessful litigation. He says while the number of referrals from the Australian Securities Exchange to ASIC for investigation is relatively small, it’s high enough to warrant concern.