The current criminal law provides criminal responsibility for the crime of insider trading in securities and futures. Measures to crack down on insider trading of funds have been added to the draft of the seventh amendment to the Criminal Law. People and staff of fund companies who take advantage of their positions to seek illegal interests or pass on risks by using their trading information are all called "rat warehouses".
However, for some state organs, financial institutions and other units, personal information will be leaked from time to time when performing official duties or providing services, and the draft amendment to the Criminal Law (VII) has made new provisions in particular.
China plans to amend the criminal law to severely punish the behavior of "rat warehouse"
The "rat warehouse" behavior in the financial field has seriously damaged the financial management order and harmed the interests of public investors, but the current criminal law has not clearly defined this kind of criminal behavior with extremely bad social impact. Therefore, it is suggested that a new clause should be added to the seventh draft of the criminal law amendment submitted to the National People's Congress Standing Committee (NPCSC) for deliberation for the first time, so as to severely investigate the criminal responsibility of financial practitioners for their "rat warehouse" behavior.
According to reports, the current criminal law only stipulates the crime and criminal responsibility of using insider information of securities and futures trading to engage in insider trading. Some deputies to the National People's Congress and the China Securities Regulatory Commission suggested that some employees of financial institutions such as securities investment fund management companies and securities companies use other undisclosed business information, such as the trading information of funds entrusted to their own units, to engage in related trading activities in violation of regulations, seek illegal interests or pass on risks. This kind of "rat warehouse" behavior should also be investigated for criminal responsibility as a crime.
In April 2008, a fund "rat warehouse" case was exposed, which aroused great concern in society. According to media reports, Tang and Wang, fund employees of Morgan Fund Company and southern fund Company, were investigated for illegal securities investment and personal gain. China Securities Regulatory Commission issued a fine and banned them from entering the market. However, due to the absence of relevant acts in the criminal law, it is difficult to investigate the criminal responsibility of the parties.
In view of this, the draft of Amendment VII of the Criminal Law under consideration adds a provision: the staff of fund management companies, securities companies, commercial banks or other financial institutions use other undisclosed business information other than insider information obtained by taking advantage of their positions to engage in trading activities related to this information in violation of regulations, or advise others to engage in related trading activities. If the circumstances are serious, it will be punished in accordance with the relevant provisions of the Criminal Law.
According to this clause, the parties involved in the behavior of "rat warehouse" may be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and may also be fined not less than one time but not more than five times the illegal income; If the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years, and shall be fined not less than one time but not more than five times the illegal income.
The judicial interpretation of "rat warehouse" is being formulated.
On the 8th, a person from the Public Prosecution Office of the Supreme People's Procuratorate revealed at an academic seminar in Tsinghua University that the "two highs" are working out a judicial interpretation that matches the provisions of the Criminal Law Amendment (VII) on cracking down on "rat warehouses". Experts expect the judicial interpretation to clarify the charges of "rat warehouse" behavior and the division standard of "serious circumstances" in the fourth paragraph.
The determination of the charges is controversial.
Some experts pointed out that the behavior of "rat warehouse" is not a kind of insider trading behavior and should be convicted independently, mainly because the information of "rat warehouse" is different from insider information. Xu Daomin, inspector of duty crime prevention office in the Supreme People's Procuratorate, said that the information of "rat warehouse" is non-public information other than inside information. Bai Jianjun, a professor at Peking University Law School, believes that insider information has occurred, but the "rat warehouse" information has not yet occurred.
Chen Ke, assistant member of the Administrative Punishment Committee of China Securities Regulatory Commission, said that during the trial of Tang Jian's case, it was found that the fund information was different from the inside information. First, there are great differences between fund information and insider information in terms of source, nature, characteristics, scope of influence and so on, and there is a lack of logical connection. Second, the Securities Law stipulates that insiders in securities trading may not buy or sell company securities before inside information is made public. If the fund investment information belongs to insider information, any trading behavior of the fund company before the information is made public is illegal. Third, insider information is related to the disclosure of insider information, while information such as fund investment decisions and fund position changes is not public.
Xu Daomin pointed out that the crime of breach of trust originated from the crime of dereliction of duty in Japanese criminal law. The core of the crime of breach of trust is that the property of the opposite party is seriously damaged by criminal acts, which is not a constituent element of the crime of "rat warehouse", but the core of the latter is illegal trading. Their legal interests are different. The former is to protect the property of the counterpart, while the latter is to maintain the order of financial transactions. He suggested using the crime of illegal trading by financial personnel.
There is an urgent need to improve legislation
Zhuang Mu, Commissioner of the Shenzhen Commissioner's Office of the China Securities Regulatory Commission, said that the determination of the criminal responsibility of the "rat warehouse" is extremely complicated and the legislation needs to be refined.
The fourth paragraph does not give the criteria for the division of "serious circumstances". Zhou Guangquan suggested identifying it from three aspects: turnover, profit and transaction times. Xu Daomin said that judicial interpretation should include how to judge and how to apply it.
As for how to identify the crime of "rat warehouse", experts have different opinions. Many experts believe that it should be classified as breach of trust. Zhou Guangquan, vice president of Tsinghua University Law School, believes that the behavior of "rat warehouse" damages the client's property rights and should be a crime of breach of trust. Chen Ke said that when studying the relevant law enforcement cases of "rat warehouses" in some countries and regions, it was found that overseas law enforcement agencies often regarded "rat warehouses" as breach of trust.
In addition, the experts also pointed out four issues that need to be clarified. First, how to define other non-public information involved in the "rat warehouse" is still difficult to define from the front. The second is the explanation of the constitutive elements of crime, such as how to punish those who accept or express hints. The third is the punishment method. If it is punished according to multiple of illegal income, it is difficult to identify illegal income. The fourth is the distribution of burden of proof.