Case Study on the Element of Materiality in Insider Trading-Centering on Merger and Acquisition Transactions
|關鍵字:||內線交易;重大消息;企業併購;Insider Trader;Material Information;Merger and Acquisition|
This paper analyzes: to date, in insider trading cases linked to material information of “mergers and acquisitions”, the “timing of material information” as decided by the relevant court and the reasoning thereof, so as to observe the trend of legal practice in Taiwan and to provide an overview and commentary thereof, with a view to benefit the research regarding insider trading regulations in Taiwan. This paper is divided into four chapters. Chapter 1 explains the purpose and motive, methodology and structure of the research; Chapter 2 provides an introduction of the basic regulatory framework and background regarding the two major subjects surrounding the center of this research: “material information in insider trading” and “mergers and acquisitions”. Three perspectives are addressed: (1)“determination of material information” under Taiwan’s insider trading regulations, (2) the regulations, types and stages for mergers and acquisitions and (3) the development of U.S. legal practices related to insider trading cases related business mergers and acquisitions. Chapter 3 is the center of this research. A searches based “insider trading cases related to mergers and acquisitions” decided courts of first instance”, 11 cases were selected and organized as described therein, each with a brief overview of the related facts and reasoning described in the relevant decision of the court of each level. Based on the above, a summary and commentary of the view expressed by legal practice then follows. Through summarizing and analyzing the reasoning behind such court decisions, this paper finds that the conventional view of the legal practice no longer takes an absolute dichotomous approach in recognizing the “Certainty theory” with respect to determination of material information. In addition to introducing the “Probabilty/Magnitude threshold” used in the U.S. “Basic Inc. V. Levinson”Case, the view of the legal practice in Taiwan also adopted “substantive agreement on material issues” and “news chain” theories with respect to determination of material information, which theories are cited in numerous decisions. However, it must be noted that, in a merger and acquisition context, discrepancies among cases with respect to timing of material information is inevitable. The courts should carefully review the variables in each specific case and evaluate the facts as a whole, and it is not possible to dogmatically adopt the so-called “Bright-Line rule”. Thus, this paper further proposes the concept of differentiating among “types of mergers and acquisitions” as the reference base for determining such type of material information, and suggest that the courts must be more prudent in handling disputes in connection with “scope of knowledge” and “the element of materiality in insider trading” , with a hope that, through collating relevant views of the legal practice to date, a more clear path for the development of Taiwan’s regulatory framework of insider trading could be built. Based on the above, Chapter 4 recapitulates the conclusion of this thesis.
|Appears in Collections:||Thesis|