The Scope Of The Subject Of Insider Trading

Insider trading is the most widely illegal conduct in the securities market. Although many countries prohibit insider trading in the securities market because of the conduct detrimental to the healthy development of the securities market, the rationale for regulating insider trading in every country may be different. Among them, the securities regulation of insider trading identified directly related to the scope of subject of insider trading, and the basic theory of insider trading is closely related to insider trading regulation. Therefore, it has always been to be an important issue to research.Our definition of insider trading regulation depends on the traditional fiduciary duty and misappropriation theory, but the two theories will be in difficult in the face of rapidly changing securities markets, information technology and diversification trend of insider trading. In fact, the misappropriation theory cannot do anything but only include the illegal means to obtain insider information. In addition, the Chinese Security Law of Article 73 on the subject of insider trading has the following expressions:“the insiders who have access to insider information of securities trading”,“ the insiders who have illegal obtainment of insider information”, “any insiders”, which brings about entanglements and contradiction in both textual and logical aspects so that there isn’t a clear definition of the scope of the insiders, the subject.These problems attribute to the inherent ills capital markets reasons(such as embezzlement, financial system risk, etc.), and our specific national conditions, which are shareholder centrism, the imbalance of company’s ownership structure.Therefore, the equal access theory should be adopted regarding the regulation on the scope of the “insider” so that the identification of the “insider” based on the markets will exclusively depend on the fact whether the person who insists illegally use the insider information that he already knew instead of being confined to whether the person bears reliance or not. Furthermore, it is suggested that “any insider” should serve as the unified legislative term for regulating the scope of the subject in insider trading in our legislation as well as adhere to the classification of the insider: corporate insider, constructive insider, tippee. If so, the regulation on insider trading is more easily to be strengthened as well as the protection of the investors’ equal rights to obtain information is promoted.