Investor compensation funds as a remedy for insider trading losses: Comparative perspectives and implications for Vietnam
Palavras-chave:
Insider Trading, Investor Compensation Fund, Civil Liability, Securities Law, VietnamResumo
Insider trading is a serious violation that undermines market transparency and may cause losses to investors. Although most jurisdictions provide administrative, civil, and criminal measures to address insider trading, investor compensation remains difficult because of obstacles in identifying injured investors, establishing causation, and quantifying losses. An investor compensation fund may therefore serve as a complementary mechanism for strengthening investor protection. Employing a functional comparative method, this paper analyses the case-based U.S. Fair Funds mechanism alongside two Asian models which are Taiwan’s Securities and Futures Investors Protection Center (SFIPC) and China’s investor-protection institutions under the Securities Law and assesses their compatibility with Vietnam’s legal framework governing insider trading. The analysis shows that Vietnamese law primarily focuses on detecting and sanctioning insider trading, while its investor-compensation framework remains underdeveloped. Drawing on these comparative experiences, the paper proposes a statutory, extrabudgetary Investor Compensation Fund financed through a combination of enforcement proceeds recovered from individual wrongdoers, capped ex-ante contributions from market intermediaries, and investment income. It also designs eligibility rules, a compensation formula, and governance safeguards adapted to the legal and institutional constraints of an emerging market.
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