Hu issued the order at a seminar organized to highlight the importance of enforcing law and order on Taiwan’s stock market in the wake of a series of large-scale insider trading cases involving senior government officials and top management of large business conglomerates and companies in recent years.

Charges brought against people involved in insider trading on the Taiwan financial market have increased, resulting in more and deeper investigations into such illegal cases, Wang Chieh-tou of the Taichung District Prosecutors Office said.

Wang pointed out the probes were focused mainly on directors and supervisors on corporate boards, senior company executives, major shareholders, market speculators, and accomplices from securities investment firms.

Coinciding with the rise in insider trading, there has also been a rampant increase in the number of bank accounts opened in other people’s names by those actively engaged in insider trading, to evade the tracking of capital flows, he said.

FSC Chairman Hu said financial institutions should beef up their management mechanisms to fight the worsening problem of surrogate accounts by verifying the identities of people opening bank accounts.

There should be harsher and more stringent penalties on those lending their bank accounts for insider trading activities by others, Hu said.

But Hu noted that authorities will target the final beneficiaries of such illegal securities transactions for punishment.

More than 160 people, including chairmen and chief executive officers from over 50 listed companies plus legal experts and people from the securities business sector, attended the seminar on ways and regulations to prevent insider trading.

Executives at the seminar raised several what they described as rather ambiguous regulations concerning insider trading, including the dates that can be established as the beginning for some major merger and acquisition deals as well as the time for releasing such important information.

One of them questioned the current FSC practice that requires listed companies to make reports or clarifications whenever there are media reports concerning certain business operations.

He said this has been annoying to many enterprises because most business information reported by the press were proven groundless later on.

Others said there are discrepancies in the definitions of “major and important information” — which enterprises are required to disclose in time — in Taiwan and foreign nations.

Grand Justice Lai In-jaw, who also participated in the seminar, acknowledged that there are certain gray areas concerning the regulations and insider trading.

He suggested that the best policy for enterprises is to take a more cautious and conservative approach, including avoiding buying and selling stocks before the revelation of vital business information and the actual occurrences of business deals.

Companies should also strengthen internal control so as to forestall possible controversies, Lai said.

The seminar was jointly chaired by Hu, who switched to the FSC as chief from the Council for Economic Planning and Development (CEPD) in January, and Justice Minister Shih Mao-lin.

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