| Summary: | 碩士 === 國立臺北大學 === 犯罪學研究所 === 98 === To prevent insider trading, legislators revised the Securities and Exchange Act in 1988 to make insider trading a criminal offense. While the Securities and Exchange Act went through further revisions to include free sentencing, heavy fines and a variety of severe punishment measures, there have continued to be cases of insider trading since the latest Securities and Exchange Act was implemented in 2006. Whether legislating for more severe punishment measures offers an effective deterrent to insider trading is therefore well worth studying in depth.
The purpose of this study is to explore the characteristics of insider trading as well as analyze the difference in guilty verdicts and sentences before and after revisions to the Securities and Exchange Act. The study hopes to determine whether a severe punishment policy for insider trading realizes the legislative goal of deterring the crime as well as the effectiveness of Taiwanese legislation and actual judgments in curbing insider trading. For this purpose, the study adopted the content analysis method used in unobtrusive research. First, each of the 81 criminal judgments handed down by the district courts for breaching Article 157-1 of the Securities and Exchange Act between May 2000 and June 2009 were treated as a distinct sample. The relevant variables in each judgment was then categorized then recorded to convert the raw data into a normalized format. The normalized data was then subjected to quantitative analysis using the SPSS (Statistics Package for the Social Sciences) statistical software. Finally, the results of the analysis were used to assess whether a severe punishment policy realized the legislative goal of deterring insider trading, the effectiveness of Taiwanese legislation and actual judgments in curbing insider trading, and collate the potential reasons why a more severe punishment policy has failed to deter insider trading.
More severe punishment laws increased the criminal sentence for insider trading to between 3 years and 10 years with the expectation of deterring the population from engaging in criminal insider trading. This study however found that for the first instance, the district courts handed down a guilty verdict for 71 accused (38%) with an average sentence of 17.91 months; a verdict of not guilty was handed down for 110 accused (59%); in 5 cases (3%) the courts dismissed or refused to hear the case. Even if insider trading cases do go to court, less than 40% of the accused are given a guilty verdict by the district courts for the first instance. The proportion of accused who received a suspended sentence for pleading guilty was 100%. Those who did not plead guilty but received a suspended sentence amounted to 38.71%. The low rate of successful prosecution, average sentences of just 17.91 months and a high chance of receiving a suspended sentence all offer little deterrence to insider trading. This can be shown in the way the insider trading has continued unabated despite the law being revised to include more serious punishments.
Based on these results, the study concludes that the belief in strong penalties and strict laws is misplaced. If strict laws don't result in effective and reasonable punishment, the letter of the law is just empty words. The study also identified possible reasons why more serious punishments have failed to deter insider trading and attempts to offer concrete recommendations on how insider trading can be prevented.
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