I. Background of the dispute:

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The prohibition against insider trading provided in Article 157-1 of the Securities and Exchange Act comes with the civil liability as provided in Paragraph 3 of the same and the criminal sanction as provided in Subparagraph 1 of Paragraph 1 of Article 171. In practice, there have been disputes regarding the inconsistency in the calculation of the value of property or property interests gained from insider trading in terms of civil and criminal liabilities and how proceeds of the crime should be determined in an offense of insider trading case. As such, Taiwan Supreme Court Criminal Grand Chamber rendered the ruling 108-Tai-Shang-Da-Zi No. 4349 in which it explains:
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II. Ruling of the Grand Chamber:
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1. With respect to the insider trading offense provided in Subparagraph 1 of Paragraph 1 of Article 171 of the Securities and Exchange Act, “The way to calculate the value of property or property interests gained by the commission of an offense shall depend on whether the actor has realized the gain or not. If the gain has been realized, the value shall be the difference in stock prices before and after the transaction times the number of shares (i.e. the “actual gain method”). If the gain has not been realized, the value shall be the difference between the actor’s purchase (or sale) price and the average of the closing prices of the stock in the 10 business days following the disclosure of the information times the number of shares (i.e. the “presumptive gain method”).  
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2. In addition, based on the legislative rationale of the amended Paragraph 2 of Article 171 of the Securities and Exchange Act announced on January 31, 2018, it is known that the “the value of property or property interests gained by the commission of an offense” shall have the cost deducted, which is different from the scope of “proceeds of the crimes” provided in the amended regulations of Forefeiture under the Criminal Code. As such, “In calculating the proceeds provided in the preceding paragraph, the taxes and costs such as the securities transaction tax and the securities transaction service fees shall be deducted.”
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(Author: Adam Hsieh, Esq.)

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