Research On The Identification Of The Time Of Formation Of Insider Information On Chinese Securities Market

The identification of the time of the formation of insider information is crucial for securities investors.In many insider trading cases,the parties defended the issue.In order to effectively calm the relevant disputes in practice,Supreme People's Court and Supreme People's Procuratorate jointly issued a judicial interpretation to clarify certain rules for the formation time in 2012.However,these rules have some shortcomings,such as the fact that the time when important events occur is equal to the time when insider information forms,which does not conform to objective facts.Therefore,after the promulgation of this interpretation,there are still many disputes about the formation time of insider information in practice.The formation time of insider information depends on the fact when the securities information has the unique nature of insider information.Insider information is important,and when undisclosed information is of importance,insider information can be considered to form.China believes that insider information should be price sensitive.The EU also recognizes the importance of insider information by this standard.The United States mainly determines the importance of information based on the criteria of rational investors.In fact,there is no essential conflict between the two standards,and there is now a convergence trend to compensate for each other's shortcomings.The importance of information is not only reflected in the importance of matters of the information involved,but also in the probability of occurrence of the event.In fact,the probability of occurrence of major issues is the core to identify the formation time of insider information.The United States generally considers this factor in the importance of information.This approach is more in line with the real needs.There are many trading links in mergers and acquisitions,which have a great impact on stock prices.It is the region where insider trading is highly promising.In the 12 similar insider trading cases selected in this paper,the author finds that the CSRC mainly identifies the formation time of insider information from the identity and the behavior of the subject involved in the mergers and acquisitions.The CSRC generally identifies that insider information forms when certain parties have reached a certain agreement,but there are also different criteria for identification in some cases.The CSRC has extensively used the term “insider information forms no later than a certain time” in its administrative penalty decision.This way of expression actually circumvents the accurate identification of the formation time of insider information,which virtually expands the enforcement authority of the CSRC and easily leads to confusion in the practice.At the same time,in many cases,the CSRC directly determines the formation time of insider information based on the abnormal trading behavior of the parties or the subsequent development of related matters.These do not touch the essence of insider information,but can be considered as an auxiliary identification factor.In theory,someone believes that it is necessary to jointly judge the formation time of insider information with the two elements of “significant matters entering the substantive operation stage” and “major issues likely to occur”.The question of this principle of identification is that it is not clear whether the formation of insider information requires that the matter involved in the information enters the substantive operational stage and how the actual operation stage is identified.Some scholars have added this point of view and believe that the “substantial operational phase” needs to be substantively explained by “great realization possibilities”.On the specific identification rules,someone points out which can be summarized the corresponding identification rules after typing insider information,and the insider information about merger and reorganization cases forms when the transaction subjects are determined.In the research,the author found that the identity of the relevant subjects involved in mergers and acquisitions,as well as their willingness,attitude,behavioral performance and other factors have an important impact on the formation of insider information.Therefore,it is possible to analyze when insider information forms from the perspective of the subject.There is also some insider information that does not depend on the subjective will of the subject,in which cases it should be measured when it becomes important.