The Application Of The Modern Financial Theory In The Calculation Of Insider Trading Civil Compensation And Judicial Recommendations

In the stock market, high yield along with high-risk, rational investors usually collect some relevant information to make decide before the transaction, and for Securities and Exchange have the characteristics of "fair, open, justice "principle, which is decide to all investors in the market must be fair and legitimate to learn all kinds of information, but few insiders by using inside information for making profit. Obviously, such a wrongful act against the interests of other investors, lead to the majority of investors will loss of confidence and then withdraw his investment in the securities market. The result would be a fatal blow to the securities market in the long run.In fact, insider trading cannot be completely eliminated in today’s stock market, our country is no exception, since the early1990s, our stock market has been troubled by the insider dealing. According to the scholars’ statistics, law violation cases occurred in China’s securities market, of which about80%are connect with the insider trading. China’s securities legislation, despite a lot of provisions are prohibited against insider trading, it is regrettable that most of the provisions provide criminal liability and administrative responsibility of insider trading, not make specific provisions on insider trading civil liability. So far our courts have not yet accepted the civil compensation cases of insider trading; the status is called "the missing of civil liability". Many countries in the world practice shows, it is not desirable to attempt a single administrative penalties and criminal sanctions instead of civil liability, effective legal means for the regulation of insider trading is to create a civil liability systern and improve the civil damage matching.I believe that we should speed up legislation to establish insider trading civil compensation system. Firstly, this can improve China s securities law system. Secondly, it is related to the long-term development of our securities market. In the end, it is also related to the convergence of China’s securities market and the world’s securities markets. In this paper, I made a research and elaboration on the meaning of insider trading and how to identify first, and then focus on insider trading civil compensation, through the use of modern financial theory to analysis and calculate, and in order to better understand these methods as soon as possible, this paper provides a real case in the end, and i hope to provide some inspiration for establishing the method of evaluating securities insider trading civil compensation system and the amount of compensation in our country.