A Study On The Regulation Systems Against Insider Trading By Civil Servant

With the deepening of China’s marketization reform,in performing their public duties,Civil servants have the chances to legally obtain inside information which could affect the securities price.Without proper regulation,insider trading committed by civil servant would inevitably occur.Actually,there do be more and more cases of insider trading by civil servants.Insider trading by civil servants not only breach the Good Faith Principle of the security market and harm the interests of the investors,but also betray the credendum that civil servants not abuse their power for private interests and spoil the civil servants’ image as public server.Laws and regulations must be made to punish or prevent such behaviors.In China’s current institution system,regulations straightly forbidding insider trading by civil servants are mostly Party rules,political disciplines or departmental rules which are not legally binding or at low hierarchy of legal validity.While in such basic laws as the Securities Law,provisions on insider trading prohibition are basically against true insiders and limited kinds of constructive insiders.When it comes to the regulation on insider trading by civil servants,the only way is to resort to the extensive interpretation of the miscellaneous provision,which not only impedes the determinacy of judicial judgment,but also lacks the capability to prevent insider trading by civil servants in advance.Therefore,it’s necessary to perfect the laws against insiders trading by civil servants.The purpose of this dissertation is to probe into the agenda for re-constructing China’s institutions against insider trading by civil servants which includes the express specification of civil servants as constructive insider,the criteria to identify the inside information concerning the insider trading by civil servants,and the basic mechanisms for regulating insider trading by civil servants through the application of such methodologies as comparative analysis,positive analysis,theoretical analysis and analysis on cases.This dissertation consists of four parts:Part One,The Putting Forward of the Issue.In this part,the author examines how insider trading by civil servants occurs in the securities market under the governments’ regulation and supervision,combs the current institution system and analyzes the defects therein,and introduces one well-known criminal case and shows the core question which is left to be solved.The author holds that civil servants should be expressly specified as commitor of insider trading in the Securities Law and regulations against it should be perfected.Part Two,The Specification of Civil Servants as Constructive Insider.In this part,the author expounds the basis theories on the identification of insider such as the the Equal Access Theory,the Fiduciary Theory,and the Misappropriation Theory,based on which,specification of civil servants as constructive insider could be justified;introduces the legislations and cases on insider trading by civil servants in the US,EU and Japan,from which China could learn;and propose the specification of civil servants as commitor of insider trading in China’s securities law which includes staff members in the legislative,administrative,judicial organs as well as in the CPC and CPPCC organs.Part Three,The Identification of Inside Information Concerning the Insider Trading by Civil Servants.In the part,the author discusses the criteria for identifying inside information,and argues that it’s necessary and reasonable to specify the public information concerning legislation,policies,governments’ decisions,economic statistics,etc.as inside information.Part Four,The Mechanisms for Regulating Insider Trading by Civil Servants.In this part,the author classifies the regulation mechanisms as the prior prevention ones and the post punishment(compensation)ones,introduces the experiences in the US,and suggests the perfection of China’s relative rules.The author points out that the prevention and punishment of insider trading by civil servants should be uniformly stipulated in the rules against insider trading,and that the registry system,reporting system,trading-forbidden system,withdrawal system,and civil,administrative and criminal liability systems should be perfected in China.