A Research Of Questions In Dispute On The Crime Of Inside Trading

On June 27, 2014, the enforcement of insider tradings in the past three years were announced by CSRC(China Securities Regulatory Commission). The number of insider trading cases in 2012 and 2013 is 70 and 86 respectively, which increased 46% and 79% compared with that in 2011. As to the number of punished staff due to insider trading in 2012 and 2013, it amounts to 31 and 66 respectively, which increased 63% and 247% compared with that in 2011. What’s more, cases that be transferred to public securities department keeps going.The sudden explosion of insider trading cases in legal practice reflects the difficulties and disputes in identifying such cases. For example, the questions about the subject of insider trading, the significance and confidentiality of inside information has been so for quite a long time, while some questions appear recently, such as the intermarket insider trading triggered by the case of Guang Da.The paper is divided into four parts. The first part elaborates the basis of the whole paper, which is the social profit violated by the criminal behavior, and summarizes the disputes in legal practice by narrating the classical cases of Guang Fa Security Company and Guang Da Security Company. Then the public profit protected by the crime of insider trading is defined with the theory of equity between risk and profit.The second part aims to analyze and solve the problems of the inside information identification. At first, the researcher summarizes the problems in legal practice with the help of studying the cases getting administrative penalty. With the trichotomy, the researcher identifies the inside information, which divides the character of the inside information into significance, confidentiality and correlation. The identification of significance needs to adopt the standards of rational investors, and the fluctuations of stock price after announcing the inside information. Also, the emphasis of perpetrator to the information is important to judge whether the information can influence the decision of rational investors. The key to affirm confidentiality has to consider the process of forming inside information as dynamic. The correlation means that inside information is the one which can influence the specific security price. The standard is vital to analyze the intermarket insider trading.The third part aims to analyze and solve the problems to identify the ranges of insiders and the ranges of persons who get inside information illegally. In this research, the researcher finds that the insiders are not limited in the articles, then the researcher puts forward the new classification of insiders. Besides, the researcher demonstrates the possibility of extensive interpretation of illegally obtaining inside information.The last part aims to analyze and solve the problems to identify the objective behavior of insider trading. The article narrates that the objective behavior includes trading securities and futures and expressing or implying others to trade securities and futures during the price-sensitive period. Judicial office can presume the objective behavior with facts. The main difference between advising others to trade securities and leaking insider information is whether the purpose is to gain illegal profit. The reason that the article includes the implication is to strike the action that attempts to avoid punishment.