Study On The Civil Liability Of Insider Trading In The Horizon Of Fair Competition Theory

Insider trading not only violates the securities market principle of openness, fairness and justice, harms the property interests of general investors, but also destroys the operation order of the securities market. Lots of countries regulate insider trading by means of law. With the development of Chinese securities market, insider trading is intensifying, and is being targeted by CSRC. At present, using administrative means and criminal means to crack down on insider trading is in full swing, but the civil liability system of insider trading has been stagnant.And on this base, the thesis attempts to explore the improvement of the insider trading civil liability system in China from a fresh perspective, from the perspective of fair competition theory. The thesis can be divided into four parts.The first part mainly introduces the basic situation of the insider trading civil liability system in China. China’s legislation about the civil liability of insider trading has experienced three stages:legislative protection, the court’s dismissal and eventually lifting the ban. But until now, China has not yet one pair of insider trading civil compensation to make specific provisions of the law. The current civil liability system of inside trading lacks specific provisions and correlative legal system, making the civil liability system of insider trading unenforceable. There are many researches on the basic theory, specific rules and litigation system. But these researches can’t determine the nature of insider trading accurately and lack the proper liability theory.The second part mainly analyzes the legal basis of insider trading civil liability system in China. The traders abuse privileged information, violating the principle of good faith and the securities market principle of fairness and justice, and also the investors’ competition interests who are homonymous trading at the same time. Besides, it also demolishes the securities market competition order. So insider trading should be a unfair competition that takes advantage of illegal information and distorts the competition mechanism of securities market. Its imputation theory should be fair competition theory that on the basis of sincere principle.Improving the civil liability system of insider trading has its own special value that not only can fill the victim’s loss but also can deterrence insider trading behavior. So it is necessary to improve the civil liability system of insider trading combining with our own actual situation on the basis of the analysis of international finance.The third part introduces and reviews the insider trading civil liability system of the United States and some extraterritorial group lawsuit systems. The USA has the most developed securities market and the most perfect securities law system. Its civil liability system of insider trading is complete. A lot of countries ’and regions’ insider trading civil liability system is copied from the United States, and most scholars in our country study China’civil liability system of insider trading on the basis of American studies. However, the USA considers fiduciary duty theory as the main imputation theory and considers insider trading as securities fraud. Misappropriation theory does little to improve the civil liability system of insider trading. Besides, the rule of " opposite trading at the same"and the rule of actual business"in American do not apply to insider trading civil compensation cases in our country.Countries outside the region generally use the group lawsuit system to dispose civil tort action of stock which has a large number of persons in either of the parties. Group lawsuit system of different countries have different characteristics. The USA uses Group litigation, the UK uses the representative litigation, organization litigation is used in Germany, and Japan as well as France use the selection of the party. Each system has its own advantages and disadvantages, we need rational reference combining the situation of our country.The fourth part discusses the improvement suggestion of the insider trading civil liability system in China in the horizon of fair competition theory. Insider trading is a unfair competition in securities market, prohibited by our "securities law" and "criminal law". According to the fair competition theory, the victim of insider trading should include investors whose trading opportunities are deprived by insider traders and investors whose profits shrinking because of insider trading. As there is no special provision stipulates which imputation principles should be applied, we Can directly quote the the general articles of tort law, adopting the fault liability principle in insider trading cases. The loss of trading opportunities is also a kind of damage.The compensation to this damage is in accordance with laws and regulations and the causal relationship is fairly. As to the method for calculating the damages, we can estimate according to statutory regulations.Securities trading is very professional as well as technical. The fair and just competition system in Securities market can not be built without public power’s high-pressure deterrent. So we can make the decision of administrative penalty or criminal judgment as the the pre-set proceedings of case hearing. Besides, we should improve the representative litigation system and compensation mechanism so as to tangibly protect the lawful rights and interests of investors.