China to toughen rules against insider trading

China will soon publish precise definitions of what constitutes insider trading, making it easier to prosecute and punish securities-related malpractice, Reuters reported, citing a report on New Century magazine’s website that referred to sources with knowledge of the matter. The Supreme Court will soon publish interpretations that allow the use of indirect evidence in determining insider trading, such as records of telephone conversations or short message services ahead of trading activities, the Chinese magazine said. The article also said the ruling would broaden the definition of insiders, clarify what is legal and what is not when obtaining information, and provide a legal basis for seeking civil compensation – though China is unlikely to roll out a mechanism for US-style class action lawsuits any time soon. The China Securities Regulatory Commission investigated 45 cases of insider trading in the first half of 2011.