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"Clear Rules, Know Risks" Case - Illegal means are useless, investment should be law-abiding and rational

Investors are no longer unfamiliar with "insider trading". Insider trading uses information advantages to harm the interests of investors, undermines the "three fairs" principles in the securities and futures markets, tramples on the integrity foundation on which the market depends, seriously affects the market order and the investment confidence of market participants, and has always been hated by investors. However, there are some people with complex mentality. Although they are not insiders of inside information, they cannot resist the temptation of interests and try every means to steal, defraud and explore inside information in the hope of getting huge returns, but in the end they cannot escape the sanction of the law.


Take Qi’s case of spying on inside information as an example. The party concerned, Qi, is the legal representative of X Investment Co., Ltd. In order to spy on the inside information of Company S, he hired Chen, a retired secretary of the board of directors of a listed company, to establish a network of people to spy on inside information and make investments based on information advantages. Taking advantage of Chen's acquaintance with Ji, the secretary of the board of directors of Company S, Qi repeatedly entrusted Chen to inquire about inside information about Company S's "merger and acquisition" from Ji. Every time after hearing the news, Qi would significantly increase his holdings of Company S's shares, hoping to make a fortune by using the gossip he spied on. However, things backfired. Not only did Qi make no money, he lost 6.9957 million yuan and was fined 400,000 yuan by the China Securities Regulatory Commission.


Through this case, we should note that in addition to insiders of insider information, people who illegally obtain inside information through deception, extortion, eavesdropping, inducement, spying or private transactions may also become the main actors who violate the high voltage line of insider trading. Article 2 of the "Interpretations of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Specific Application of Laws in Criminal Cases of Insider Trading and Leaking Insider Information" stipulates this. According to the provisions of Article 76 of the Securities Law, if you buy or sell the company's securities before the inside information is made public, or leak the information, or recommend others to buy or sell the securities, you will violate the red line of insider trading and constitute Article 1 of the Securities Law. Insider trading as described in Article 202.


Strictly punishing the behavior of spying on inside information and trading will help eliminate the evil trend of "trading based on information gathering" in the securities and futures markets, rebuild market confidence, and maintain the integrity of honest investment in the capital market. Here again, investors are reminded to enhance their awareness of self-protection and beware of falling into the trap of insider trading. It is unrealistic to try to get rich overnight by relying on inside information. You should have legal channels to obtain securities information. Those who defraud, spy on inside information and engage in insider trading with a sense of luck will surely face severe legal punishment and ultimately pay a huge price.


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