The changes, announced by the Federal Government last Thursday, aim to increase fines and jail time for those convicted, as well as ASIC's power in relation to phone-tapping and search warrants.

Allens Arthur Robinson partner Warwick Painter is not surprised that the Government has made the proposals and urges clients to adopt a squeaky-clean approach in order to avoid becoming embroiled in an investigation.

"We have been calling this the 'rising tide of regulation'. It is fair to say that the tide just got higher ...We'll tell [clients] that they can no longer assume that someone is not looking over their shoulder," he said.

Mallesons Stephens Jaques partner Damien Richard believes it is too early to determine the extent and implication of the changes.

"Ultimately, the devil will be in the detail," said Richard. "At the moment the detail is so light ... it is difficult to pin down exactly what these changes will be. At this stage, it is not a fundamental change to the law."

Painter says that perhaps wielding more power, than the changes to evidence-gathering and penalties will be the deterrence factor.

"The increased penalties are designed to send a strong message. That's what this is all about. They are designed to indicate that [market offences] are considered to be serious offences," said Painter.

Richard, however, is sceptical that tougher penalties will deter those in the financial services sector.

"We are talking about white-collar crime here and people who are more concerned about their ability to earn income in the future. Even the prospect of a prosecution can end a career. Protecting their ability to earn an income, and their reputation, is a far more powerful deterrent than saying they will go to gaol for six years as opposed to four. It's really an irrelevancy," said Richard.

Richard and Painter believe that many of the issues relating to ASIC's recent inability to successfully prosecute three high-profile cases (Fortescue, OneTel and AWB) relates more to the difficulty in making out the elements of the offence than to ASIC's inability to gather evidence.

"There is the whole issue of the laws themselves and there is a range of technical issues with the market misconduct laws. Insider trading laws are notoriously complex and there's a whole lot of difficulties with those laws," said Richard.

- Claire Chaffey