Securities rules issued by top court

China's top court on Tuesday released new guidelines for judges trying criminal cases that involve insider trading and leaks of secret economic data.

The judicial interpretation, issued by the Supreme People's Court, aims to better protect the securities and futures markets.

Chinese judges tried 22 similar cases in the last five years, although half of those occurred in 2011, according to the top court.

"The amount is not large, but the speed of growth in the last five years has been very fast," Sun Jungong, spokesman for the Supreme People's Court, said at a news conference in Beijing.

In the entire country, there were 11 cases involving insider trading or leaked information in 2011, more than 10 times as many as in 2007.

To highlight his point, Sun used a case involving Huang Guangyu, the former Chinese appliance tycoon jailed in 2010.

Huang, the major shareholder of Beijing Centergate Technologies, which is listed on the Shenzhen Stock Exchange, asked others to buy the company's stocks before statements of major transactions and corporate restructuring were issued.

He acquired more than 140 million shares valued at 1.8 billion yuan ($286 million) and profits of nearly 400 million yuan in three such insider deals, according to the court.

Beijing No 2 Intermediate People's Court gave Huang, formerly China's richest man, a 14-year sentence in prison in May 2010 for illegal business dealings, insider trading and corporate bribery.

In another case , Du Lanku, a former accountant for China Electronics Technology Group, was also given a six-year sentence for insider trading in Wuxi of East China's Jiangsu province in 2009.

"These examples are typical cases of insider trading that have seriously jeopardized the security of the capital market and the economic order," Sun added.

Pei Xianding, senior judge of the Supreme People's Court, echoed Sun, saying the publication of the interpretation was timely.

The interpretation gives a definition of people possessing insider information and describes under what circumstances people can be found guilty of illegally obtaining insider information.

"Every stockholder wants to know insider information to earn more money, but if they get such information in illegal ways or with malicious intent, they should face punishment," Pei said.

An analyst at China Post Securities, who did not want to be identified, said that the judicial interpretation has more specifically defined the abnormal conditions of insider trading, which makes it easier for regulators to collect evidence.

The analyst said the interpretation pointed out that red flags should be raised if the timing of transactions are consistent with insider information. The time spent on investigations may be reduced dramatically, the analyst added.

However, an official with the China Securities Regulatory Commission, who also did not want to be identified, said it will still be difficult to investigate insider trading because the crime is covert and high-tech.

It usually takes at least 15 days to determine one funding source, and about seven sources can be used to solve the whole case, the official said.

Meanwhile, the top court also added that most suspects in the cases have professional knowledge, including security, futures and accounting. They mainly transfer the insider information using the Internet, which presents a great obstacle for legal workers gathering evidence.

The regulatory commission has been accelerating the disclosure of cases since its new chairman Guo Shuqing pledged to take a zero-tolerance attitude and crack down on illegal securities transactions.

The total number of investigated cases involving inside trading or leaks of secret economic data in the Chinese market has exceeded the sum of those in all mature markets in the world, according to the commission.