| As a kind of "chronic disease" in the securities market,insider trading is an accompanying phenomenon of market development.Even in the mature capital markets abroad,insider trading remains a major violation of the law.The first judicial interpretation about crime of insider trading made the elements of insider trading crime clearer.Among them,the "illicit proceeds" of insider trading takes the responsibility of both conviction and sentencing.Therefore,the accurate determination of the illegal gains of insider trading is of great significance to combating insider trading,protecting the interests of small and medium-sized investors and promoting the healthy development of China's capital market.But sadly,the judicial interpretation does not provide operational standards for the key issues identified in the illegal gains.In practice,the two sides also agree on the calculation standard of the amount of illegal income and there is a lack of reasoning in the judgment document.As a result,the identification of illegal gains in insider trading needs to be solved urgently.This paper is based on the relevant provisions of China's legislative and judicial interpretation.By summarizing existing administrative law enforcement and criminal justice practice as well as the practice and theoretical exploration of the problem in the United States,Japan and Taiwan,conductes a more comprehensive study on thedetermination of illegal gains in insider trading.Chapter One determines the concept of "illegal gains" in the crime of insider trading and disclosure of inside information and recognizes it as illegal economic cashing of special profits or avoidance opportunities obtained by insiders of insider information through insider information.In this section,the paper also discusses the three sub-problems of this concept.The first section focuses on the theoretical analysis of the illegal income of insider trading and the dichotomy of crime proceeds.In the area of administrative criminals,there will be a problem of factual assessment of confusion if the economic interests obtained by the perpetrator are mechanically separated into two parts,"illegal" and "criminal" so that it will hinder the cooperation and connection between administrative law enforcement and criminal justice.Therefore,the "illegal income" in this place is a simple language problem,it does not involve the distinction between legal concepts.There is no need to further divide it into general illegal income and crime income.Instead,we should examine its illegal connotation with a substantial view.Section II excludes the dividends arising from the securities to which the insider trading is directed beyond the concept of illegal proceeds of insider trading crimes.Dividend calculations involve only mathematical technical processing,regardless of the legal normative analysis.Regardless of whether the "high delivery" itself is not inside information,dividends in the monetary sense are unlikely to become an integral part of the illegal income independent of the transaction spread and an independent object of confiscation.The proceeds of insider trading are concerned with fluctuations in economic interests,not wealth itself.Dividends have only a static,wealthy meaning and have no direct effect on the growth of wealth through stocks.Therefore,the amount of dividends should be used as a mathematical correction when calculating spreads without the need to specifically classify their legal nature.Section III discusses the issue of whether transaction costs can be deducted from and how to deduct the proceeds of crime from insider trading.The initial investment of the perpetrator in the purchase of shares should not be regarded as the cost of crime,the crime of insider trading is not reflected in the illicitprofits of insider information obtained or avoid opportunities,the main body of its carrying cash or stock held by the perpetrator.In terms of "cost" in real sense,the direct transaction cost of insider trading crime is allowed to be deducted,and the opportunity cost of financing cost is not allowed to be deducted from illegal income.The second chapter makes a transition from the discussion of simple legal concept to the combination of criminal principle and technical means.This chapter divides the crime of insider trading from the objective performance into the two-way type of insider trading and the one-way type of insider trading,and then sorts out the disputes arising from the different methods of calculating the two types of insider trading illegal gains.In the two-way type of insider trading,the "actual income method" believes that irrespective of the time span of two transactions by the perpetrator,the actual gain or loss from the sale of the underlying financial products should be used as the illegal proceeds.According to the "market absorption method",the disclosure of inside information only affects the changes in the prices of capital markets for a certain period of time.This information should not be included in the proceeds of the bribe after it is absorbed by the market."Associated income method" has made a more strict restriction on illegal income based on the "market absorption method",advocating that the illegal income of insider trading should be premised on the fact that there is a considerable correlation with inside information,and the price changes due to other market factors need to be removed.In the one-way insider trading,"strict net profit method" believes that since the perpetrator bought only and did not sell,then the illegal proceeds should be zero.This method deviates from the actual investigation of economic interests,it has been difficult for the theory and practice of mining.However,"book preparation method" advocates that the illegal income of the perpetrator should be selected and approved at a specific price after the inside information is disclosed.The problem with this claim is that it has logical inconsistency with the actual income method of two-way transaction.In response to the controversy that arose theoretically,chapter three attempts to propose a uniform approach that can be applied to all types of insider trading and sort out possible exceptions based on the identification of major principles.Based on thetheory of causation and the theory of adaptation to crime and punishment,it is necessary to introduce the "base date" into the calculation of the illegal proceeds of insider trading.The base date is the date when the inside information is fully absorbed by the market.If the perpetrator trading time has not yet reached the base date,the court should use the actual income method to calculate illegal gains.If the base date can be used,then the base date closing price as the basis for calculating illegal income.The second section discusses the nature of the profits before the disclosure of insider information.Before the inside information was disclosed,the illegal economic value inherent in it did not penetrate into the market.Therefore,these profits are not related to the inside information and should not be taken into account Illegal income.Section III summarizes two possible defenses under the general principle,whose burden of proof should be borne by the defendant.First,if the defendant can reasonably prove that some of the proceeds of the illegal gains calculated based on the above principles still come from market factors,the deduction shall be allowed.Second,if the defendant conducts insider dealing for the benefit of the client as a manager of the assets management,the illegal proceeds may be measured by the remuneration it receives.The fourth chapter discusses the cognizance of illegal income of people who commit crimes of insider trading crimes and divulging insider information.Among them,the first section illustrates the concept of illegal income to be explored in this chapter in two steps.First,according to the non-transactional and transitive nature of these two acts,the merger is defined as a "transitive type of insider trading",distinguishing it from the crime of insider trading not by means of guilt but by behavior.Secondly,it compares the difference between the illegal proceeds of insider trading and the illegal gains of insider trading.It is clear that the illegal income of the perpetrator of the insider trading is not the illegal income in the economic sense.It is the difference between the provisions of the criminal law and the judicial interpretations under the framework of the concept of the ruler,because of its lack of physical,can not be directly identified by the transaction spread of illegal income,it can only rely on its "projection" in capital markets--the insider trading behavior ofinformation recipients to determine.Section II proposes that due to the lack of transaction,transitive insider trading should not be based on the conversion rate of100% to transact the illegal income of the transferer into the illegal proceeds of the transitive insider trading,but should be determined according to the closeness between the transitive act and the transacting behavior below 100% conversion ratio.Which explicitly,suggesting that others engaged in insider information related to insider trading than leakage of insider behavior to be closer to the transaction,so the former should take higher than the latter conversion ratio.At the end of the second section,the article discusses the effect of the length of information transmission chain on the determination of the illegal income of transfer-type insider trading.Based on the widespread pyramid-type insider trading cases in the capital market,the criminal liability of information transferors and transaction recommenders should be limited to information within the specific chain of the chain of transmission to prevent the perpetrator from being liable for the illegal gain of exponential growth.Specifically,if the perpetrator does not have a subjective understanding and objective influence on cross-section information leakage,only the amount of illegal income calculated on the basis of the insider trading conducted by the information receiver at an adjacent level shall bear criminal liability. |
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