Insider Trading And Its Legal Restraint

Since the first stock exchange established at Amsterdam of Netherlands, in 1611, the securities exchanging in western countries has been continuing for more than 400 years. The appearance of stock market, however, like an opened Pandora's box, brings us not only the treasures but disasters.Insider trading, or marketing securities with, the information that hasn't been proclaimed to the public, usually rigging the trading prices of securities, can date back to the origin of the securities exchange. The struggle between insider trading and anti-insider trading will never cease, as is known that the phenomenon of insider trading can't be eliminated as long as the securities exchange is still in existenceThe legislation against insider trading, which primarily appeared in US in 1930s, is thought to be the most effective tool, and the campaign of making such laws has started all over the world.In our country, the securities exchange, appeared in the middle of 1980s, improved in early 1990s, has a short term history but glorious achievement, and various kinds of legal violations showed up in such an undeveloped market. The improvement of such a market refers to a legal system suited, to which a series of theories must support.Fortunately, in the process of the securities exchange, we attach much importance to the legislation against insider trading, although such legislation lags greatly behind the steps of the securities exchange.This essay, with the title of Insider Trading and Its Legal Restraint, composed of four parts, seven chapters and an Introduction, tends to make an exploration of this topic.Part one is constituted of chapter one and two, discussing the reality of insider trading. Chapter one introduces the definition and meanings of insider trading, the economical and systematic sources causing its emergence, as well as the nature when it is in social evaluation system. Chapter two makes an analysis of the elements composed ofinsider trading, describing its three components: inside information, inside personnel and exchange of inside information.Part two deals with the basic theories about legal restraint on insider trading, constituted of chapter three and four. Chapter three introduces some disputes about insider trading in economics, criticizing some unreasonable ideas existing in economic analysis, showing that insider trading brings more harm than benefit to the society. Chapter four makes a profound analysis about the fairness and effectiveness of the legislation against insider trading, pointing out that insider trading violates the fair trade principle of law, and the operation of laws against insider trading is by no means inefficient.Part three focuses on the legal restraint about insider trading, which is composed of chapter five and six. Chapter five tends to conclude the achievements and defects through the introduction of the history, the current status and the development of legislation abroad against insider trading. Chapter six, on the other hand, presents the condition of insider trading at home as well as the legislation against it, making a detailed analysis of the legislative defects in our country.Part four is a summarization of the content above, including five pieces of conclusions and four pieces of suggestions. The conclusions are the following: the theories concerning inside information; the concept of legality embodied in legal restraint on insider trading; the concept of systematization embodied in legal restraint on insider trading; the concept of efficiency supervising the emergence of insider trading, and the concept of punishment when executing insider trading. Four pieces of legislative suggestions against insider trading are: reconstituting a logic system of basic legal terms; perfecting the prevention system against insider trading; enacting strict liability when performing insider trading; and establishing legal relief system to protect the individual victims.