Supreme Court revises judicial interpretation of insider trading

China's top court has revised the judicial interpretation of insider trading over the past weekend, as part of its ongoing efforts to combat increasingly covert market manipulation and protect investors' legitimate interests.

With over 200 million stock investors and 700 million fund investors nationwide, the country's capital markets have become a vital platform for the public to share in the benefits of economic development, according to the Supreme People's Court.

"However, illegal activities, such as trading on insider information and its unauthorized disclosure, continue to pose significant threats, severely disrupting market order and harming investors' legitimate interests," the SPC stated, noting that insider trading has become more sophisticated in recent years.

"Some individuals were found to have fabricated false contracts or plans to evade legal scrutiny, while some were discovered to have established 'hidden positions' during the acquisition of listed company shares to gain massive illicit profits," the SPC added.

Since the beginning of 2021, Chinese courts have handled 204 criminal cases related to insider trading and the leaking of insider information, resulting in the punishment of 243 individuals, 51 of whom received prison sentences of five years or more.

"These figures underscore the judiciary's commitment to cracking down on misconduct in the capital markets and its firm stance on protecting investors, particularly retail investors," it said.

The SPC emphasized the need to further refine judicial interpretations and regulatory documents related to the sector, striving to promote a law-based economy.

While reviewing the interpretation of insider trading, the court stressed the importance of addressing new issues and developments in the capital markets, calling on courts across the country to promptly disclose notable cases to ensure the healthy development of the industry.