To determine if stocks are illegally speculated, the court should explain about its determination criteria to consider how an actor’s behavior of continuously purchasing specific stocks for high prices or continuously selling the same for low prices results in the abnormal transaction competition of the stocks in the market and abnormal stock prices.(Taiwan)

2016.09.14
Oli Wong

The Supreme Court rendered in the 105-Tai-Shang-2304 Criminal Decision of September 14, 2016 (hereinafter, the “Decision”), holding that to determine if stocks are illegally speculated, the court should consider how an actor’s behavior of continuously purchasing specific stocks for high prices or continuously selling the same for low prices results in the abnormal transaction competition of the stocks in the market and abnormal stock prices along with an explanation of the determination criteria.

According to the facts underlying this Decision, the original decision held that the Defendants had jointly committed offenses under the Securities and Exchange Law and imposed a heavier penalty upon the Defendants based on the imaginative concurrence relationship under the Criminal Code for their joint violation of Article 172, Paragraph 2 of the Securities and Exchange Law. The Defendants dissatisfied the original decision and appealed.

According to this Decision, the offense of manipulating stock prices under Article 155, Paragraph 1, Subparagraph 4 of the Securities and Exchange Law only involves “continuously purchasing for high prices or selling for low prices designated securities for his own account or under the names of other parties with an intent to inflate or deflate the trading prices on said securities traded on the centralized securities exchange market.” Therefore, it is also necessary to consider if the prices of specific securities cannot objectively be resulted from free market supplies and demands and price competition in light of an actor’s behavior of continuously purchasing specific securities for high prices or continuously selling the same for low prices. However, to determine if such offense is constituted, it is necessary to consider how an actor’s behavior of continuously purchasing specific stocks for high prices or continuously selling the same for low prices results in the abnormal transaction competition of the stocks in the market and abnormal stock prices along with an explanation of the determination criteria.

It was further held in the Decision that since the original decision had failed to indicate the transaction rules or criteria relied on for the stock market trading materials as cited before concluding that the stock trading behavior of the Appellants was abnormal and sufficient to undermine stock market prices or order in an attempt to manipulate stock prices, not to mention the illegality of the original decision for contradictory decision reasons, therefore, the original decision was reversed and remanded.