A legal action against market participants like Securities Trading Centers and their staff, securities firms and their employees, issuing com panies and their officers, and other persons w ho violate the securities regulation are not m entioned in D ecree 48/1998, nor are they stipulated in the E nterprise Act. Article 79 D ecree 48/1998 merely provides for the settlement o f disputes arising in the issuance and trading o f securities and in other sccurities transactions. Hovvever, this provision is inserted in Chapter X, namely “ Inspection, Supervision and Treatm ent o f Violation”, following the tvvo Arlicles, 77 and 78, vvhich provide for inspection and supervision by the s s c . This íầct seems to imply that disputes m entioned in Article 79 are only those found by such inspection and supervision, and do nol include disputes instituted by public investors. As such, it is unclear vvhclher 01' not public investors have rights o f action under the current securities regulations.
Articlc 79.1 says thai disputes over securities transaclions arc to be initially handled by the rclevanl parties on a negotiation and mediation basis. Stock Trading Centers, Stock E xchanges and the ssc can act as a third party in reconciliation of such disputes. W here parties taiI at sell-handling the dispute, they can bring the case to an econom ic arbitrator or a court o f lavv Ibr settlement 01' trial, respectively.
Sub-article 2 o f Article 79 goes on to provide for ihe settlement o f disputes involving a fbreiízn parly. i r these dispntes cannot be handled by thc relevant parties on a nesotiation basis, and cannot be settled in conformity vvith an international treaty to w hich Vietnam is party, then the disputes vvill be solved in conlbrmity with the law o f Vielnam.
Novvhere in the Article or in Chapter X are rights explicitly vested in investors to sue the securities lavv otìendcrs on their own initiative, to protect themselves.
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D ecrce 22/2000 merely provides for the rights o f individuals to m ake accusation regarding administrative violations to the State com petent authorities.307 Accusation regarding other violations not o f an administrative nature cannot be m ade by individuals since there is no concrete legal basis for doing so. Possibiy, in order to institute legal action against a w rong doing where the violation is not o f an adm inistrative nature, investors have to rely on general statutory provisions found in thc O rdinance on P rocedure fo r Settlem ent o f Civil Disputes~m and the C rim inal P ro ced u re C ode? ũ9
Rights to take legal action are o f importance. Such rights, if adequately adopted, can usefully cooperate with the market w atchdog in preventing insider trading and other deceptive practices. It might be helpíul to learn from the Japanese experience. For a long period o f time, private rights o f action w ere not leoally recognized under the Securities cmcl Exchange L a w in Japan. The old Article 58 o f the Law does not give a direct legal íoundation for civil remedies.
The rem edies, hovvever, can be found in Article 709, the C ỉvil Cocỉe. 310 Unfortunately, the provision has never been Lised to prosecute insider trading in Jap an .311 More precisely, there vvas only one insider trading case, but it merely
307 S e e Art. 19. 2.
'os S e e Art. I. Thi s Articlc e mp o w e r s citizens and legal entities vvitli the riiihts to inslitute legal pr occe di nus imainst vvrong doers to protect tlieir lavviiil intcrests.
On Au g u s t 2, 2 0 0 2 , for the íìrst time, a c o m pa n y vvas sued by vvorkers for depr i vi ng them o f scveral billions V i c t n a me s c D o n g by not paying social insurance fees and vvorkers’ salary. This lcu,al action vvas taken by seven vvorkers, 01 1 be ha l f o f a n o t h e r 260, vvorking at the Pirst Branch, Thien Ho Production Ltd. Co. The case was brought into Thu Duc District Court ( l ocated in Ho Chi Minh City). For more intbrmation, sec “Cty TNI-1H Thi en Ho ( T P H C M ) clìicm doat tien BH XH : C o n g nhan klioi kien Cty ra toa!1' [Thien Ho Ltd. Co.: Usurpi ng Social Insurance Fees - Workers Sue at a Court o f Law!j, D ao Lao d o n g [T h e L a b o itr], Issue N o . 2 0 5 , A u g . 6, 2 002.
http://\v\\Av.laocỉoim.eom.vn/, visitcd Ang. 6, 2002.
Thi s c a s e although it has not yet been heard, shovvs tlial the lanmiage o f Article 1, the O rd in a n c e otì P r o c e d u r e f o r S e ítlc m e n t o / C i v i l D isp u íes, is very broad. Perhaps, shareholders can s i m i l ai iy take a cl as s aclion against the c omp a n y \vhere the c la s s interesls are injured.
ỉ lovvever, it is unclear vvhether a derivative suit can be broimht into court under this Article 1.
309 A r t ic le 84 o f t h e C o d e v e s t s in c itiz e n s the r i g h t to a c c u s e a criminal oỉTender. Article 87 i mp o s es criminal prosec ut i on obligations on a number o f State c om p e t e nt authorities such as investiíiaiion organs and ihe Peopl e' s Prosecutors' OlTice. Where the c r i mes oc c ur vvithin their ovvn j urisdict ion, Border Def en d i ng Army, Naval Force, and the Forestry O f f i c e can al so institute prosecutions. Courts can al so institute prosecution if during a trial t hey find a nevv cri me or a nevv crinìinal offender.
310 S e e L o u i s L o s s e l a l ( eds. ), above II. 261, 192.
Ibid, 192 - 3; s e e also Ram/ i Nasse r above II. 261. 328; sce al so Curtis J. Milhaupt,
“ Maiìíminu the Markct: the Ministrv o f Pinance and Seeuritics Remilation in Japan' \ ( 1 9 9 4 ) 30 S ían /orcl ./o u n icỉl ()f Iníơ/'ỉJaíi()fĩcỉ/ l.a \v 423, 454. I lereinaller. Curlis Milhaupt.
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appeared in the press, not being reported in any official case reports.312 A num ber o f reasons for thát have been found: (1) most Japanese did not think insider trading to be wrongful conduct,313 (2) Japan is an inherently non-litigious society;314 (3) Japan lacked provisions for class actions and effective discovery procedures; (4) Japan has extremely expensive litigation fees for taking a civil action.315 Although lceal action can be initiated under Article 709, the Civil Cocỉe, it is m aintained that
"any lort acíion p la ces the burden o f p r o o f on the p laintiff, a n d J ap an 's discovery p ro ced u res m ake p ro v in g a violatỉon o f insider tra d in g laws extrem ely
d iffìc u lt” .3I6
Possibly the absence o f direct statutory provisions on private right o f action and class action in the Secu rities a n d Exchange Law, as well as other aspects o f social and legal culture, have resuked in the íầilure to detecl insider trading in Japan. In the literature, an often-seen observation is that Jap an is a heaven o f insiđer trading.317 While in the ư s , the nuinber o f actions against insider trading taken by the SEC alone am o u n t to 300 per year, in Japan there have only been three cases brought to trial.31 This fact, however, shows that the small num ber o f cases brought to court in Japan cannot be attributed only to the dearth o f concrete legal bases for rights o f action in the securities regulations. It also indicates thai the Japanese market w atchdog does not seem to have made a real effort in detecting insider trading. This is probably the case, since in a num ber o f circum stances, even whcn concrete legal bases for rights o f action are available, there might still be a đearth ot' litie,ation since investors themselves cannot detect or do not knovv vvhether this or that transaction actually constitutes insider trading.
In Ihe u s , to ansvver Ihe question vvhether Congress allow s a private right o f action under Section 10(b), one wi 11 have to look at the language o f that Section,
\vhich does not seem to explicitly speciĩy such a right. H ow ever, aside from statutes cnactecỉ by the legislature, the u s case law is an o th er important source
112 S e e Louis Loss e t a l (cds.), a b o v e 11. 261, 192.
' L1 Ibid, 191- 192; s e e also Ramzi Nasser, abo v e n. 261. 384.
'u Cul i s J. Milhaupt, a bove n. 3 1 1 . 455; see also Ge orge F. Parker. "T h e Regulation o f Insider Trađiniỉ in Japan: Introducing a Privattí Righl o f A c l i o n ”, ( 1 9 9 5 ) 73, ịV a sh in g to n U n iv e r s ity Lcnv Ọ ìia r le r ly 1399, 1414. Mereinalìer, George Parker.
,l5 Ibid ( Ge or ge F. Parker), 1414 - 5; see also Larry Zogl i n, “The G l ob a l Securities Market:
ỉnsider Trading in Japan: A Ch a l l e ng e to the Integration o f the Japane s e Equity Market into the Global Securities Market ”, ( 1 9 8 7 ) C o h tm b ia B u sin ess L a w R eviexv 4 19, 4 2 2 .
316 Ibid ( Ge o r g e F. Parker), 1422.
517 Scc Rnm/.i Nas s e r , abo v e 11. 2 6 1 , 382 - 383; see George F. Parker, a b o v e n. 3 1 4 , 1403; and see also Shen- Shi n Lu, "Are the 1988 Amc n d me n t s to Japanese Securities Regul at i on La\v Effective
Deterrenls lo Insider Trading?", ( 1 9 9 1) ( 'ohm ihia B u sin ess Lcnv R e v ie \v I 79, 193.
,IS Sec Gcorue Parker, above n. 3 14, 1403.
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under w hich a private right o f action against violators o f Section lOb can be found.
In K ardon V. N ational G ypsum Co., the plainliff shareholders sued the defendant shareholders for violating Section 10(b), the Exchange A c t vvhen purchasing shares from the plaintiffs vvithout disclosing material iníbrmation. The ư s District Court for the Eastern District o f Pennsylvania held that the defendant shareholđers entered deceptive transaction and that the p lain tiíĩ shareholders were entitled to a private remedy w ithout proving vvhether or not the defendants proíìted from the transaction.319