Taiwan's regulations on insider trading are "unclear" and the Cabinet-level Financial Supervisory Commission (FSC) should be held responsible for neglecting its duty, participants in a forum in Taipei yesterday complained.
At the forum on how to revitalize the financial market and uphold social justice, Robert Tsao (曹興誠), honorary chairman of Taiwan's chipmaker giant United Microelectronics Corp., said many of Taiwan's businesses are apt to become insider trading offenders because of the unclear nature of the regulations.
Tsao said the regulations have not defined insider trading clearly, nor is it clear what constitutes a violation that should be referred to public prosecutors.
Former Minister of Finance Yen Ching-chang (顏慶章) said the insider trading regulations, in their present form, should not be enforced rigorously because doing so would hurt the interests of many enterprises and their shareholders.
Yen added that before referring an insider trading case to public prosecutors for investigation, the Ministry of Finance should allow a business operator to defend himself by giving him the opportunity to explain the process of the transaction.
KMT Legislator Lai Shyh-bao (賴士葆) agreed that the regulations governing the nature and scope of "material, non-public information" for insider trading and the definition of the moment when that information becomes material are not clear. He suggested that a review is needed to examine how to revise the regulations.
The current regulations rely on the point at which information becomes material to determine whether an accused party is guilty of insider trading.
The regulations stipulate that insiders are not allowed to buy or sell stocks of their company within 12 hours of the release of important information. The controversy is over how to determine at what point information should be judged as being in the public domain.