Scenarios on Insider Trading
Scenario A
March 2004, Group J requested SFC for exemptionabout the agreement transferee of shares Company A but failed. Then in April, Group J began equity participating in Company A by a subsidiary company in the secondary market and made banner announcement on June 19 when the subsidiary company had held 5.08% shares of Company A. And 3417674 shares was bought by the subsidiary company a, which accounted for 3.32%. During this time, Zhang chaired vice CEO of Group J and General Manager (legal representative) of the subsidiary company. He was an inside man and he could make a profit of hundreds of thousands if he bought the shares of Company A at ￥10 in March and sold them at ￥20 two months later. Do you think that Zhang should make use of the inside information?
most important / more important / important / less important / unimportant / A Should B indeterminably C Should not1 / 2 / 3 / 4 / 5 / 1、How many shares of Company A does Zhang hold? How much does Zhang’s private profit overlap the profit of Company A?
1 / 2 / 3 / 4 / 5 / 2、How important about the decision of the others nearby Zhang?
1 / 2 / 3 / 4 / 5 / 3、Is it difficult to investigate and punish this illegal dealing? And must lawbreakers be prosecuted?
1 / 2 / 3 / 4 / 5 / 4、Will Zhang regret it if he did the inside trading and harmed the interests of the others?
1 / 2 / 3 / 4 / 5 / 5、What’s the type of the audit report issued about the financial statement of Group J and Company A?
1 / 2 / 3 / 4 / 5 / 6、Should Zhang consider that he would lose the first-chair respected by the staff?
1 / 2 / 3 / 4 / 5 / 7、How long will the announcement be delayed to publish that Group J participated Company A?
1 / 2 / 3 / 4 / 5 / 8、Will Zhang get the huge profit and not care being prosecuted?
1 / 2 / 3 / 4 / 5 / 9、Should Zhang need to consider whether he would lose the respects of friends and relations?
1 / 2 / 3 / 4 / 5 / 10、Is the illegal profit several times of Zhang’s annual salary?
1 / 2 / 3 / 4 / 5 / 11、Are the shareholders' rights of Company A concentrated? Are the shares of Company A dealt by Zhang easily?
1 / 2 / 3 / 4 / 5 /
12、Will Zhang lose the profit humiliated and not rise from his ashes again if he were prosecuted?
1 / 2 / 3 / 4 / 5 / 13、How about the moral standardand credit quality of Zhang?1 / 2 / 3 / 4 / 5 / 14、Is the highest punishment of the related laws and rules less than the profit which Zhang may get?
1 / 2 / 3 / 4 / 5 / 15、Should Zhang need to consider whether the others do the inside dealing in the same situation?
1 / 2 / 3 / 4 / 5 / 16、Is there any technology system to investigate this illegal dealing sensitively and efficiently?
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Scenario B
Company Y was going to make a bonus issue announcement of board of directors in Dec. The managers planed to buy the shares and sell them before publishing the resolution to make profits. They were very clear on the legal responsibility. However, Company Y had no enough working capital. They asked Securities Company B to finance and promised to share the profit with B by the proportion. At that moment, according to the rules in China securities market, any financial institution was forbidden to provide a loan for stock exchange and the managers of Securities Company B knew it very well. But in fact it was rarely found and punished in the past and the managers of B hesitated for the probable profit of 15,000,000 at least. Should they accept the request of Company Y?
most important / more important / important / less important / unimportant / A Should B indeterminably C Should not1 / 2 / 3 / 4 / 5 / 1、Is the financial statement of Company Y issued unqualified audit report generally?
1 / 2 / 3 / 4 / 5 / 2、Are there any rivals who get huge profit in the same way?
1 / 2 / 3 / 4 / 5 / 3、Is the highest punishment of the related laws and rules less than the profit which Company B may get?
1 / 2 / 3 / 4 / 5 / 4、Will the managers of Company B consider that the illegal dealing is going to harm the interests of individual investors?
1 / 2 / 3 / 4 / 5 / 5、Are there any shareholders in the managers? Will they agree with this dealing?
1 / 2 / 3 / 4 / 5 / 6、Is there any effect on the ranking and developing of Company B in future if they did this illegal dealing?
1 / 2 / 3 / 4 / 5 / 7、Will the stockholders’ structure of Company B effect the inside dealing?
1 / 2 / 3 / 4 / 5 / 8、Is the profit of this dealing high, compared to the annual income?
1 / 2 / 3 / 4 / 5 / 9、Is this illegal dealing opposed strongly by the rivals?
1 / 2 / 3 / 4 / 5 / 10、Is Company B going to take a risk to earn the profit?
1 / 2 / 3 / 4 / 5 / 11、Did Company B disclose this kind of resolutions in time in the past?
1 / 2 / 3 / 4 / 5 / 12、Is providing loans for stocks dealing the focus of attention of Supervision?
1 / 2 / 3 / 4 / 5 / 13、How about reputation of the managers of Company B among the industry and media?
1 / 2 / 3 / 4 / 5 / 14、Is it easy to investigate and punish that Securities Company B provided a loan?
1 / 2 / 3 / 4 / 5 / 15、What will the other securities companies do in the same situation?
1 / 2 / 3 / 4 / 5 / 16、Will Securities Company B be recusal on the securities because of this illegal dealing?
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