| This dissertation mainly studies the legal system of securities insider tradingconstituent elements in the major capital markets jurisdictions and China, by means ofnormal and functional comparative, analyzes their structures and implementations,explores the essential roots of differences, summarizes the deficiency of legislativeintent of Chinese anti-insider trading legislation and its adverse impact on the legalsystem, and then for the purpose of enhancing the effectiveness of insider tradingregulation, establishes the essential system interests and reconstructs the system.In addition to Introduction and Conclusion, this article consists of five chapters:Chapter Ⅰ “The Object Elements of Securities Insider Trading: Inside Informationand Its identification”, indicates that inside information is the decisive factor of insidertrading. In regard to the composition of insider information, the materiality andnonpublic factors has been recognized by every jurisdiction, which define the nature ofinside information by quantity and quality. Conversely, the the relevance and precisefactors, which could dstruction the effectiveness and efficiency of the insider tradingidentification, have no independent value. In defining of materiality, The specificpattern which can not list all the material information in advance, are hardly adaptedto the highly fact-dependent identification practice. While, the abstract pattern whichadopts a “reasonable” investor test, taking into market reactions, expected impact ofthe overall activities of the listed companies, reliability of the source of informationand attitudes of the insiders, could ensure the completeness and accuracy of regulation.In defining of nonpublic, though the formal pattern and essential pattern bothdedicate to promoting the truthfully, accurately, completely and timely disclosedisclose of materil nonpublic information to the investors, depriving of insiders’ unfair informational advantage, the former is closer to the objective truth of informationpubliction by using a market reaction test and excees the latter on rationality andefficiency.Chapter Ⅱ “The Subject Elements of Securities Insider Trading: Special orGerenal”, focuses on the opposition between special approach and gerenal approach onsubject elements overseas in jurisdictions. The formor emphasizes the means throughwhich the insiders access to information, and requires there should bespecific relationship about dentity, employment or contract between the insiders andthe source of information. However, the latter focuses on the fairness and efficiency ofthe securities market, and refers to the fact of possession of information as the subjectelements only. The special approach is increasingly passive in the face of the reality ofinsider trading practice, whose list of insiders is far from being complete, and has toafterwards confirm after each new insider type appears, but also causes the complex oflegal norms and could not be able to provide investors with a clear behavioralexpectations. Contraryly, the gerenal approach abandons the requirements of meas ofaccessing to information, which disregards of the specific relationship between insiderand the source of information, not only is able to include all the outsiders whichoutside the special approach and ensure the comprehensiveness of the scope ofregulation, but also benefits to improve the simplicity and certainty of the legal normsto provide investors with good behavior guidelines and prediction.Chapter Ⅲ “The Subjective Elements of Securities Insider Trading: Debatebetween Knowledge and Use”, points out that the identification of subjective elementsis the most prominent problem in the insider trading judicial and enforcement practice.The knowledge factor should become an essential element for the purpose ofsafeguarding the legitimate rights of behaviors and avoiding objective imputation.With regard to the content of knowledge, it is should include the presence of a learnedinside information and understand the information is material and nonpublic. Thedegree of fault can be either intention and negligence. To alleviate the difficulties ofproof, the legitimate means of knowledge identification should incloud proving by indirect evidence and using presumption. Altrough the motivation factor of usinginsider information, which emphasizes the causal association between insider tradingand inside information, has reasonable basis, its drawbacks should not be ignored. Onthe one hand, the transaction motivation is too complex to effectively identified, theuse factors can only be presumpted even if in the recognized jurisdictions. On the otherhand, the use factor which contains a higher risk of abuse, can easily become insider’sshield to evade responsibility. Threrefore, abandoning the use factor and stipulatingstrictly statutory exemptions, which not only can ensure the innocent behavior is notimplicated, but also avoid the risk of opportunism of insider, should become aneffective alternative for use factor.Chapter Ⅳ “The Objective Elements of Securities Insider Trading: BehaviorForms and Exemption Stuations”, believes that both suppressing unlawful act andtencouraging legitimate investment are necessary for the development of securitiesmarket. For the definition of insider trading’s behavior forms, in is should insist on akey standard of harms to the fairness and integrity of the securities market, whetherhas caused actual harm or has a real danger of causing damage, whether for personalinterests or the interests of others, whether the relevant securities trading results hasoccurred, do not affect the establishment of insider trading. For the enaction ofexemption stuations, should follow the principles of conduciving to the developmentof the securities market, only behaviors which has no causal association with insiderinformation, such as trading according to pre-existing plans, trading bynon-human entity which has established an effective information isolation system,trading which faithfully implements customer instruction, or behaviors which couldmaintain and promote the normal and orderly operation of securities market, such asmarket making, takeover of listed companies, trading to exercise of the legalobligations, and behaviors of state bodies could be able as the exemption stuations ofinsider trading.Chapter Ⅴ “Comparison of Constituent Elements of Securities Insider Trading inOverseas Jurisdictions and China: Norms, Intents and Functions”, conculds that there are convergences and divergences in the overseas legal system of securities insidertrading elements, it is the division of legislative intent between anti-fraud and mrketitegrity, which leads to the differences in norms design. The legal system of securitiesinsider trading constituent elements which based on the intent of anti-fraud has beenlagging behind the one which based on market itegrity intent. In this article’s opinion,insider trading is not fraud which directly damages to the interests of the individualinvestors, the theoretical basis of the anti-fraud legislation is questionable. Therefore,in is appropriate to define insider trading as unfair securities trading which indirectlydamages to the interests of investors generally, the legal system of securities insidertrading elements which based on the intent of market itegrity maintainance intent fitsthe nature of insider trading more than the anti-fraud legislation. The unique duallegislative intent of Chinese anti-insider trading legislation, which equates the personalinterests and the overall interests of investors, brings about the logical defects andnarrow subsumtion of the system, and leads to the troubles of the applicable practice.In order to solve the dilemma of anti-insider trading legislation and the needs of insidertrading regulation, the most appropriate appraoch is abandoning the anti-fraud mindsetand confirming the market itegrity maintainance as the essential system interests, onthe basis of which reconstructing the legal system. |
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