The Calculation Of Disgorgement Of Profits In Insider Trading

It’s important to establish the calculation methods and standards of disgorgement of profits in insider trading for punishing perpetrators, protecting the interests of investors and the order of stock market.The researches of insider trading system among domestic scholars mainly focus on civil liability for damage instead of disgorgement of profits for a long time. There is also improper tend to calculate the disgorgement of profits in an indirect way by identifying the loss of investors.This paper discusses the theory and practice of extraterritoriality about the calculation of disgorgement of profits in insider trading, and detailed reviews the recent regulatory practice and the practice of criminal justice since the period, and finally propose specific recommendations to improve the rule in our country.Firstly, the article compares the extraterritorial theory and practice of calculation of disgorgement of profits in insider trading, and analyzes two common identification methods in depth. The method of actual profits is a simple operation, but it’s maybe not accurate because of the different time points of the transaction. However, the other method needs to take market fluctuations into consideration. Secondly, the article explores the reference date and non-associated factors in fictional profits and results that we should considerate the indicators of stock market on specific time.Next, the article collates 136 penalty discussions of China Securities Regulatory Commissions and 17 verdicts of criminal court as simple. Also it arranges the calculations and applicable situations in practical and discusses the focus of controversy like reference date and reference price. Overall, the practical is based on actual profits and supplemented by fictional profits. But the rationality of results of actual profits is still open to question by simply calculating the change accounts.Finally, the article makes recommendations of calculation of disgorgement of profits in insider trading combining theory and practice at home and abroad. "Fictional profits" focuses on punitive function under the premise to assure fairness. At the same time, we should take the closing price of resume trading day as a reference price taking the trading mechanism of current stock market into account. But it should consider the market fluctuations and exclude non-associated factors. We can also require expert to supply supports on theory of finance when it’s necessary.