Study On The Civil Obligation System Of The Securities Insider Trading

Civil Liabilities for insider trading in stock exchange provide solid guarantee for investors for they perform such functions as loss compensation, precaution and determent. Though attaching great importance to Administrative and Criminal penalty, current Chinese Law System in force only prescibes fundamental principles for matters concerning Civil Liabilities, leaving such issues as who is entitled to Claim compensation, who is to compensate, the identification of Cause and effect, the standard and sum of compensation for loss and the relevant civil procedure(s) to take, etc. not clearly defined.The present thesis mainly discusses Civil Liabilities for insider trading in stock exchange through case study and comparative analysis. The author tentatively prosposes that those investors who of good intentions adopt contrarian investment strategies against the insider traders within the same day should be the one who may claim loss compensation. And the obligor of such loss should be those insiders or presumed insiders in the company as well as the receiver and those who misappropriate the inside information. Cause and effect can be apparent or presumedly idenfied as long as the investors have only to prove that the insider traders have never disclosed the inside information to them and they have in fact suffered. The standard and sum of compensation for loss should be defined according to the loss suffered and be no more than what the accused has gained or the loss prevented by him or her, rather than taken as punitive measures. And lastly, proper discretional undertaking system should be introduced into China's Civil Action in insider trading in stock exchange.The thesis falls into six parts: the Introduction, the First Chapter, the Second Chapter, the Third Chapter, the Forth Chapter and the Conclusion, as follows:The First Chapter introduces Civil Liabilities for insider trading in stock exchange. First the author gives her own version of definition of Insider trading in stock exchange from the perspective of its constituents and then that of Civil Liabilities for insider trading in stock exchange.The second chapter is about the character and the constituents of the Civil Liabilities of insider trading in stock exchange. It is suitable to define the character as a special kind of rights-violating liabilities. The particularity of that character is that though liabilities of breaking a contract and that of violating rights seldom happen at the same time, the tendency of rights-violating is especially obvious. The constituents should consist of four elements as follows: loss facts, the character of the facts of their violating the law, subjective errors, and the cause and effect between the law-violating actions and the loss facts. The loss fact of insider trading is limited to pure economic loss. The rights-violating in insider trading lies not only in violating obligations they should obey by law but also in infracting the victims' civil rights. The cause and effect belongs to a complex one that consists of many causes and only one effect. Its particularity here is to exploit lots of cause and effects by understanding. The subjective errors of insiders are different according to various insider trading actions.The Third Chapter briefs the current situation of the Civil Liabilities System of insider trading in stock exchange in different countries and regions, e.g. America, England, Japan, China's Hong Kong and Tai Wan, and China's Mainland respectively.The Forth Chapter discusses the perfection of the Civil Liabilities System of insider trading in stock exchange. The author dissertates the necessity of perfecting the Civil Liabilities System of insider trading in stock exchange from four aspects: protecting investors' interest, preventing and deterring the occurrence of insider trading, strengthening the supervision on stock market, and intensifying the role of law in solving disputes. Consequently, the author puts forward her suggestions for the Civil Liabilities System of insider trading in stock exchange: by adopting "theory of simultaneous trade", clearly defining the obligor of loss, enlarging the range of compensation obliger, recognizing those who suffer from insider trading don't have to identify the cause and effect of loss from insider trading, defining the standard and sum of compensation for loss through the so-called Price Difference calculation method, perfecting the Civil Action system and undertaking system.