The Information on the stocks in the capital market is very important to the investors who are going to invest their money to those stocks since they make their investment decisions under the information that they could get from the capital market. However, if the information is unequally given to the investors, what is going to happen to the capital market? Suppose that some investors have very important information on some stocks and some investors do not have it. Then the investors who do not have the information may not believe the market's credibility and stability anymore. Once the market lose its confidence the market will be easily collapsed. So, every country has their own regulations on such impartial possessions of information on such stocks in the capital market. The insider trading regulation is the main legal aspect. The legal theory of insider trading regulations has been improved through the cases in the United States for long time and the Securities Exchange Commission enacted Rule 10b5-1 and Rule 10b5-2 in order to complete the legal theory of the insider trading regulation in 2000 with the perspective of the Misappropriation Theory.
Actually the Korean Securities Exchange Act did not prescribed such insider trading regulation when it was enacted in 1962. However, when it was revised in 1976, the insider trading regulation was provided and the last amendment was made in 1997. But the Korean Securities and Exchange Act was abolished since the Financial Investment Services and Capital Market Act(FSCMA) is in effect in 2009. The FSCMA regulates the insider trading.
This Article analyzes the U.S. cases that built and complete the legal theories of insider trading regulation and examines the provisions of insider trading under the Korean Securities Exchange Act. The Article also reviews the insider trading regulations under the FSCMA and suggests some improvement of the insider trading regulations in Korean capital market.