Controlling insider dealing through criminal enforcement in China
| Pages | 1061-1073 |
| DOI | https://doi.org/10.1108/JFC-05-2020-0089 |
| Date | 25 June 2020 |
| Published date | 25 June 2020 |
| Author | Zhen Ye,Wangwei Lin,Neshat Safari,Charanjit Singh |
| Subject Matter | Financial crime,Accounting & Finance,Financial risk/company failure |
Controlling insider dealing
through criminal enforcement
in China
Zhen Ye
3PB Barristers, London, UK
Wangwei Lin and Neshat Safari
School of Law, Coventry University, Coventry, UK, and
Charanjit Singh
Business School, University of Westminster, London, UK
Abstract
Purpose –The purpose of this paper is to review the criminal enforcement of insider dealing cases in
People’s Republicof China’s (PRC) securities market and to provide feasible suggestionsfor improvement for
a more coherent and streamlinedinsider dealing regulatory framework in the PRC duringthe enforcement of
China’s new SecuritiesLaw (SL 2020) in March 2020.
Design/methodology/approach –Through analysing the previous literature on public interest
theories and economic theories of regulation, this paper examines the necessity to regulate insider dealing
in China with criminal law to ensure fairness and avoid monopolies in its securities market. The paper
reviews the criminalising of severe insider dealing cases in China from the Nanking National Government
in the 1920s to the inception of the securities market of the PRC in the 1990s to the present day. The
investigation, prosecution, enforcement and trial of criminal offences of insider dealing in China are
thoroughly examined.
Findings –The paper finds a tendency for over reliance on the investigation and the administrative
judgement of the China Securities RegulatoryCommission in criminal investigation, prosecution and trial in
the PRC.
Originality/value –To the best of the authors’knowledge,this paper is one of the first papers to critically
and thoroughlyanalyse the criminal enforcement of insider dealing in Chinafollowing the recent enforcement
of China’snew Securities Law in March 2020.
Keywords Insider dealing, Criminal enforcement, China, Securities market, Financial regulation
Paper type Research paper
Introduction
Afinancial market has a variety of functions, such as effectively diversifying investment
risks and optimally allocating resources. Of all the factors that contribute to the
fulfilment of such functions, the market’s reputation for integrity is one of the most
important; however, this may be severely undermined by financial misconduct, which
subsequently has a negative impact on the economy as a whole. Insider dealing as an
example of such misconduct is not new. It occurs when a person uses privileged material
information obtained by virtue of his or her position to trade in the subject securities. It
is argued that those in positions of trust, such as directors, officers and beneficial
owners, not only dishonestly advance their own interests by using non-public price-
sensitive information, but they also jeopardise the interests of uninformed investors, as
Criminal
enforcement in
China
1061
Journalof Financial Crime
Vol.27 No. 4, 2020
pp. 1061-1073
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2020-0089
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
To continue reading
Request your trial