Research On Legal Regulation Of Gray Insider Trading In Listed Companies

The gray trading of listed company insiders refers to the unfair advantage trading behavior of the listed company itself,the directors,supervisors,senior management personnel of the listed company,shareholders holding more than 5% of the shares and their close relatives to buy and sell the company’s shares.Compared with external investors,insiders are more familiar with the company’s internal information.In the environment of information asymmetry in the securities market,based on their profitseeking motives,insider trading can easily be converted into inside information trading and market manipulation.However,in practice,there are also a large number of unfair trading activities that do not constitute illegal activities such as insider trading and market manipulation,that is gray trading.Insider gray trading in listed companies usually include a series of or multiple behaviors,typical of insider transactions from the perspective of short-term transactions,share repurchases and market value management.Insider gray trading are not illegal,but they are unfair to outside investors.Legal regulation of the gray trading behavior of listed companies is related to the health and stability of the securities market,and is of great significance to protecting the rights and interests of external investors.The legal regulation of gray insider trading in listed companies needs to sort out the current rules and practices of legal regulation related to insider trading,and clarify the basic theory,basic thinking and specific regulation methods of its regulation,so as to alleviate the current abuse of insiders in listed companies The predicament of the flood of information advantage transactions prevents gray insider transactions from transforming into black transactions such as inside information trading and market manipulation,provides a strong grip for securities regulatory authorities to effectively control illegal insider transactions,and effectively connects insider trading in black areas.The fuzzy zone between illegal acts such as market manipulation and legal transactions of insiders in the white zone realizes a standardized and complete regulatory system for listed insider transactions.If the gray insider trading in listed companies is included in the scope of legal regulation,what is its theoretical basis is the first problem that must be solved.There are two types that are most closely related to securities regulation: one is the "fraud theory",and the other is the "signal theory",in which the fraud theory provides a theoretical basis for the necessity of regulating insider transactions,but the fraud theory is only applicable to securities fraud,it does not have complete legitimacy and rationality for the gray insider trading in listed companies.Signaling theory provides an effective theoretical framework to explain why allowing the existence of gray insider trading.The legal regulation of the insider gray trading in listed companies should be transformed from the fraud theory to the signal theory,and the regulation should be carried out under the guidance of the signal theory logic.Legislation has long adopted the strategy of "blocking" insider trading,that is,strictly prohibiting insider trading.It was not until the implementation of the new "Company Law" in 2006 that the ban on insider trading was lifted,and the regulation on insider trading changed from "blocking" to "unblocking".However,today’s regulations on insider trading still have a strong "blocking" color.But even so,insider trading violations are still emerging,and there are a lot of unfair advantage trading behaviors in the gray area.Under signal theory,there is a rationale for the dominant trading behavior in the gray area.Legal regulation of the gray insider trading in listed companies should change the current regulatory concept,and establish the central position of information disclosure.From the perspective of short-term trading,share repurchase and market value management,there is one thing in common in the gray trading behavior,that is,insiders may buy stocks in large quantities before the stock price rises,and within the holding period obtaining positive excess returns,and then selling stocks in time to avoid losses when or after the stock price falls,is essentially that insiders take advantage of information to conduct timing transactions.The legal regulation on the insider gray trading in listed companies is mainly carried out in three stages: before,during and after the event.Gray insider trading behavior from the perspective of short-term trading,firstly,we should strengthen the supervision of the declaration of changes in insider shareholding,and strengthen the information disclosure obligation of changes in insider’s shareholding,especially the pre-declaration system;The identification of the main body adopts dynamic identification standards,which is determined based on whether it violates the fair trading order,and improves the exemption mechanism;finally,the allocation of administrative penalties should be canceled,and the excess profit cut-off mechanism should be used instead of the disgorgement of profits,to effectively make up for short-term transactions partial defects of disgorgement of profits.Gray insider trading behavior from the perspective of share repurchase,first of all,the legitimacy of repurchase within the "safe harbor" should be clarified,which should be distinguished from market manipulation.Second,the relevant regulatory content in the gray area should be strengthened,the information disclosure obligations of insiders in the repurchase should be strengthened,and the relevant provisions on the prohibition of transactions during the sensitive period and the reduction period should be optimized;finally,it is necessary to rationally widen the path of shareholding reduction after the repurchase,attribute the excess returns obtained by the repurchase to the company,clarify the legal consequences of the fake repurchase,and reduce the risk of illegal transfer of interests by insiders.Gray insider trading behavior from the perspective of market value management,it is necessary to grasp the criteria for the use of market value management tools,strictly distinguish the boundary between market value management and market manipulation,and prevent market value management from being alienated by strengthening the information disclosure requirements in market value management and improve the insider reporting system of listed companies to prevent market value management from being alienated as a tool for insiders of listed companies to transfer interests and seek excess returns.