On The Civil Liability Of Insider Trading

The basic principles for conducts in securities market is fair, public andequitable, while so far as the conduct of taking advantage of undisclosed insideinformation for insider trading is violation of this basic principle, whicheventually leads to the abnormal fluctuation of security price, harming theinterests of investors, and undermining the order of securities market. In China,relevant laws or regulations are relatively consummate with respect toadministrative responsibility and criminal liability other than the lagging civilliability legislation concerning insider trading. However, the causalityidentification, weighing criteria for damages, confirmation for right subject forrequest and compensation obligor, and litigation system etc. are still criticalissues for solution and vacancy for civil liability legislation. Refining for thecivil liability of insider trading, proper assurance for investors and protectivebarrier for good securities market order shall be in first place in respect offunctions of Compensation, Deterrence and Prevention.Case and comparative analysis have been adopted in this article, to discussabout the system of civil liability for insider trading, and raise personalperspectives, in hope of certain promotion for the refinement of civil liabilitywith respect to securities insider trading in our country.First Part, Brief on Civil Liability Of Insider Trading. As for this part,firstly the insider trading is noted, which comprises of three aspects of subjectof insider trading, inside information and insider conduct to define the insidertrading; and then discussion on the nature of civil liability for insider tradingis carried out, I have defined the same with comprehensive comparison of kinds oftheories at home and abroad; finally analysis on the constitution of civil liabilityfor insider trading is carried out, from such aspects of damage results, causalityand fault principle.Second Part, comparison of civil liability for insider trading at home andabroad. As for this part, firstly it concludes the related regulations for civilliability for insider trading in Britain, USA, Japan and Taiwan of China, turns outrelatively consummate for the civil liability legislation of insider trading in Britain, USA and Taiwan of China while Japan relatively lags behind. And then ithas compared the current legislation situation and legislative origins respectivelybetween mainland and Taiwan of China and these countries, and concluded theshortcomings for civil liability legislation for insider trading in our country ofnowadays.Third Part, refinement of civil liability for insider trading in our country.As for this part, firstly it analyses the necessity and urgency for refinement ofcivil liability system for insider trading, which shall be good for protection ofminority investors’ interests, good for the management of securities companies,good for the development of whole securities market, and good for the accuracy ofmacroeconomic policy in China. And finally specific issues needed to be refined areanalyzed on and dissertated, including weigh criteria for damages, burden of prooffor causality, introducing disgorgement system regarding short-term trading,founding Public welfare protection agencies, confirmation for right subject forrequest, confirmation for compensation obligor, and discussion on litigationsystem.