Construction Of Insider Trading Civil Compensation System

As an inevitable phenomenon in the stock market, insider trading is affecting the reasonable order of stock market with market manipulation, false information disclosure and other common market fraud.Since China’s securities market was established in the 1990 s, insider trading activity has occurred a plenty of times. From the earliest "Xiangfan" case, to the recent "Everbright Security" case, insider trading has been the object of the securities regulatory authorities focus on. Recently the "Everbright Security’ case led to the first batch of securities civil suit for compensation, which marks a step forward in China’s securities market. But our civil compensation on insider trading legislation is still clearly insufficient. This is partly due to the current imperfect provisions of the relevant legislation on civil liability for insider trading, on the other hand, it is the result of our security market is not developed perfectly to protect investors’ rights and interests.There are following five chapters.Chapter I systematically summarize the basic concept of insider trading, and analyze our current situation of insider trading by summarizing 118 insider trading administrative penalty cases of the China Securities Regulatory Commission.Chapter II focus on the value standpoint of civil compensation system and the location of civil liability considerations. The three aspects of value standpoint is, firstly to protect and maintain the balance between investor confidence with the company’s normal operations, secondly to keep the balance between the cost of prosecution with judicial costs, and thirdly to keep balance between the interests of the plaintiff with the defendant.Chapter III analyzes the constituent elements of insider trading, including four areas, actors, insider trading behavior, the fact of damage and the causal relationship.Chapter IV makes specific recommendations in accordance with the insider trading legislation, including the identification of the parties, the defendant’s basic conditions and how to determine the causality principle and the amount of compensation.Chapter V introduces the basic facts of "Everbright Security" case. And according to the theory of this paper, this article analyzes Chinese first batch of insider trading civil suit.Finally, the last part of this paper makes the view, in consideration of our practice of insider trading civil liability legislation, which is the investors are the key of market, and the core elements to promote the civil liability legislation.