Newsletter
SEA PROVISIONS ON MARKET MANIPULATION AND INSIDER TRADING TO BE AMENDED
To combat illegal insider trading and maintain fairness in securities market transactions, the Financial Supervisory Commission (FSC) has proposed new amendments relating to the pre-vention of market manipulation and insider trading to the Securities and Exchange Act. The suggested amendments include:
Prevention of securities market manipulation:
1.Failure to settle a trade will be distin-guished into two categories: failure of an investor to settle with a securities firm, and failure of a securities firm to settle with the market.
2."Wash sales" intended to create the im-pression of market activity will be prohib-ited.
3.The provisions against market manipula-tion will also apply to actions that simul-taneously affect multiple shares, shares in particular sectors, or the entire market.
Prevention of insider trading:
1.The following persons will additionally be defined as company insiders:
(1)Former company directors, supervi-sors, and major shareholders, for six months after they lose such status.
(2)Individuals appointed as representa-tives by corporate entities that are elected as directors or supervisors.
2.A "cooling-off" period after the an-nouncement of price-sensitive information will be expressly defined: a company in-sider of an issuer may not buy or sell shares of the company within 12 hours after the disclosure of such information.
3.The competent authority will be empow-ered to make regulations on matters relat-ing to price-sensitive information, such as the scope of such information and the method of disclosure.
4.The provision on the method for calculat-ing civil compensation for insider trading will be amended as the difference between the purchase or sale price of the securities on the day of the insider's transaction by a bona-fide purchaser or seller in transactions of the opposite kind, and the average clos-ing price of the securities over the ten trading days following the disclosure of the price-sensitive information.
The FSC expects the clearer definition of insider trading offences to more effectively deter such activities in the future.