A Study on Prevention of Insider Trading:ood Corporate Governance and Administration
Date Issued
2009
Date
2009
Author(s)
Yeh, Mei-Jing
Abstract
Insider trading is used to refer to a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider''s duties at the corporation, or otherwise in breach of a fiduciary duty or other relationship of trust and confidence or where the non-public information was misappropriated from the company. Rules against insider trading on material non-public information exist in most jurisdictions around the world, though the details and the efforts to enforce them vary considerably. he Legislative Yuan made an Amendment to the “Securities Exchange Law”, Article 157-1 to restrict insider trading in January 29, 1988. In the history of Legislation process, there is a clear tendency of felonization. Atfer anzlyzing those prosecuted insider trading cases in past ten years, we find that most of the defendants were verdicerd “not- gutilty”, or rendered with light sentences, and both the criminal and civil procedures delayed for many years. “Failing to prove the defendant knowing the non-public information” is the mojor reason for most not-guilty cases, and the problem can not be solved by enhancing prosecutors and judges’ prodfession. Thus it does not work well to deter insider trading by harsh punishment only. ike other white-collar crimes, there must be motivation, insiders Neutralizing Social Controls, and opportunities for an insider trading to happen. As a result, Corporates must set up a good internal control system and legal compliance program to reduce the motivation and opportunities for the doers, and change the morale and culture which might ptomote insider trading in the company. Mealwhile, the supervisory authoriry should have administrative power of investigation, and various enforcement tools, such as applying for an injunction from the courts, suspending the directors’ duties to provdie prompt corrective action for insider trading.
Subjects
Insider Trading
Prevention
Corporate Governance
Administrative Supervision
SDGs
Type
thesis
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