证监会与最高院严打内幕交易

China's top court has released new guidelines for judges trying criminal cases involving insider trading and leaks of secret economic data, aiming to better protect the securities market.

To Chinese stockholders, the announcement is good news.

"It's good to release detailed rules to regulate securities business."

"If someone violates the regulations to leak secret information, they must be punished severely, because it's unfair for ordinary people to lose their hard-earned money due to insider trading."

"I hope the government will put more emphasis in regulating capital markets."

China's securities market has long been plagued by manipulation and "rat trading". Some brokers and high-level managers at financial institutions use inside information acquired on the job, reaping illicit gains and affecting share prices.

In the past five years, Chinese judges have tried 22 cases of insider trading and data leaks, and the number of such cases is increasing every year.

Qiu Baochang, a lawyer in Beijing, says that insider trading is becoming increasingly detrimental, systemized, and more difficult to fight, as more advanced information technology has made the collection of evidence a tougher job.

"Although there are many clues that lead to insider trading, only a small number of the cases are tried due to a lack of maneuverability. For instance it is difficult to discover who the insiders are and what behaviors are considered illegal. Courts and government departments may have different definitions. Finally, the judicial interpretation has given a clear definition."

The judicial interpretation specifically defines the abnormal conditions of insider trading, which makes it easier for regulators to collect evidence. It also points out that red flags should be raised if the timing of transactions is consistent with insider information.

Though widely welcomed by the public, some economic experts point out that the new legal guidance doesn't involve civil compensation.

Professor Han Fuling at the Central University of Finance and Economics in Beijing gives his opinion.

"Civil compensation is hard to apply in these cases, because if one person is liable for insider trading, normally, he can not afford the millions of yuan in financial losses. And if the company where the insider works is liable, it may not actually be involved in the illegal activity. Therefore, the company shouldn't pay the compensation."

The judicial explanations on insider trading are the first of its kind. Experts say further specifications are needed in order to solve disputed legal issues regarding securities and futures related crimes.

For CRI, I'm Wang Xiao.