The Listed Company Insider Trading Civil Liability System Of Comparative Study

Insider trading has undermined the fairness of the security market by endangering most investors’interests while favoring the few. Civil compensations must be made for the damages caused by insider trading. Here the author analyzed and compared civil legal systems of insider trading in countries and regions such as US, EU, China and other places with the purpose of finding the merits to China’s legal system.The definition of insider trading is base stone for the entire system. Part I made a thorough analysis in respects of basic features of inside information, scope of insiders and manifestations of their conducts. The most detailed portion is about inside information, where not only the materiality and non-publicity but also the precise nature was discussed, advice on the emerging problem of internet inside information were given too.In Part II, based on the recognition that insider trading falls under the scope of both breach of contracts and torts, the author discussed that it would be unreasonable if insider trading was handled as breach of contracts; meanwhile if treated as tort, the interests of investors would be well protected. Considering the complicity of calculation of damages and proof of causal relationship, the author suggested insider trading be seen as a special tort.Part III continued to analyze the merits of legal systems on the calculation of damages and distribution of proof burdens in US, Taiwan and some other countries and region, with a conclusion that these methods should be borrowed in China’s legal system.Part IX mainly introduced the civil action system on insider trading. The Contemporaneous Traders theory invented by US is easy to operate on confirmation of the number of plaintiffs thus it should be brought in. Also, our Security Administration Committee has little civil function compared to SEC and FSA. This shortage might be made up by establishing an independent organization to undertake the civil function. At last, the author suggested that we should make improvements on our existing civil procedure system by learning from the Class Action in US which had been a strong support to investors since its establishment.