The Legitimacy of the Criminal Rule of Insider Trading and the Theoretical Basis
Date Issued
2008
Date
2008
Author(s)
Huang, Chih-Chung
Abstract
This thesis mainly discusses whether or not insider trading should be banned, and if so, what the theory basis should be. The thesis is divided into eight chapters. The First chapter describes the meaning of issues and the scope of research. The second chapter generally explains the definition of insider trading and its legal effect. The third chapter goes into whether or not insider trading should be forbidden. The fourth chapter demonstrates the instances of legislation of several countries about insider trading. The fifth chapter discusses the theory basis of controlling insider dealing. The sixth chapter shows the liability formation of tippers and tippees. The seventh chapter deals with other problems of insider trading. The last chapter is the conclusion. As to the question of banning insider trading, I think insider trading is detrimental only because of the people’s misunderstanding that it harms themselves. Thus insider dealing could influence the securities market in a disadvantage way. So it still has the need to be governed. Examined by the principle of proportionality, however, using criminal penalty to deal with insider trading is unnecessary. Since the detrimental character of insider trading is caused by people’s misreading, all we should do is to clarify the mistake. We don’t need to and shouldn’t to treat it with criminal penalty. Therefore, the criminal regulation of insider trading is not necessary, and its existence is hard to be justified. However, since the criminal regulations of insider trading already exist, we still need to probe into the theory basis which the regulations depend on. After observing several instances of legislation, I adopt “Special Relationship Theory” as the fundamental logic to prohibit insider trading. When a person gets inside information through a special information transferring route, he is entitled to subject to insider trading rules. In this way, we can exclude those who get inside information by chance from be criminalized. Moreover, when it comes to the tipper/tippee liability, we can also employ the persistent theory to determine the extension of responsibility. Under the practice of special relationship theory, we can apply a proper limitation on the criminal liability of insider trading, and make the regulation less unjustifiable.
Subjects
insider trading
securities market
market-oriented theory
duty-oriented theory
special relationship theory
tipper/tippee liability
SDGs
Type
thesis
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