| Summary: | 碩士 === 中原大學 === 財經法律研究所 === 106 === In recent years, numerous cases of company insider trading (such as TransAsia Airways, XPEC Entertainment, Mega International Commercial Bank, and the Taiwan Land Development Corporation) have increased focus on the Securities and Exchange Act. Many insider trading cases did not follow Securities and Exchange Act regulations, which stipulates that stakeholders who have knowledge of major news that can affect stock prices cannot sell their stocks once the news is confirmed. However, court decisions for this type of cases might not be guilty when the parties are in reality guilty. This type of repeated decisions confuses investors, and they may not know what to do. Most investors in Taiwan’s securities and futures market are individuals (reference 2003 – 2016 annual report from the Securities and Futures Investors Protection Center). Compared with securities traders, futures traders, and distribution companies, investors tend to be economically weaker in the stock market. To prevent harm to investors’ rights, and to provide appropriate relief pathway for affected investors, legislative policy has gathered the power of multiple investors into securities class action. Securities class action system can be used to provide compensation to affected investors, can deter illegal action, and maintain stock market order. Thus, class action is becoming valued by investors. If affected investors forfeit their relief, they will not be able to receive compensation for damages, and violators can get away with their illegitimate gains without consequence. However, if individual investors bring up litigation, the cost can be prohibitive. The decision of different courts may also conflict with each other. When an investor litigates or appeals because their right was infringed upon, they may not be able to hire a lawyer because their individual investment amount is too small; or, the litigation cost may be too high, and the investor is forced to give up ongoing litigation. Taiwan’s existing Securities and Exchange Act legal structure cannot prevent class action related disputes. As a result, Taiwan corporate scandals have occurred over and over again. There are no other systems that can prevent insider trading from occurring or protect investors after insider trading has occurred. In this study, we use burden of proof and class action cases to explore whether there are deficiencies in the regulations. We also discuss the problems we face and propose solutions to these problems.
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