Recently, King&Capital Law Firm in Beijing received a decision not to prosecute for the crime of insider trading. Against the backdrop of a crackdown on securities-related crimes and illegal activities in accordance with the law, this decision not to prosecute was hard-won. It reflects the legal team’s day-in, day-out dedication and the investigative authorities’ commitment to fulfilling their duties in accordance with the law, and further demonstrates the implementation of a criminal policy that balances leniency and strictness amid the current wave of crackdowns.
This case is a typical instance of insider trading arising from a major asset merger and reorganization, involving multiple parties and complex legal relationships. The listed company in question was planning a major asset reorganization, and the client, an employee of the company, maintained regular contact with company executives through daily work. Prior to the reorganization, the client received an anonymous email disclosing certain insider information. At the time, the client faced an urgent need for substantial funds due to a sudden family emergency. Acting on the information with some skepticism, the client traded shares of the listed company in question, selling them immediately after realizing a profit, thereby allegedly committing the crime of insider trading.
Following the client’s criminal detention, he promptly retained King&Capital Law Firm, which subsequently formed a legal team comprising senior partners Zhang Qiming, Xu Ying, Xu Ming, and Dai Shengyun. The legal team swiftly intervened and formulated a defense strategy. The defense attorneys met with the client immediately to gain a detailed understanding of the case, conducting a thorough inquiry into how the client obtained the insider information, the nature of the transactions, and the motives behind them. The legal team quickly determined that the defense must not only challenge the disputed facts but also fully leverage the client’s statutory mitigating factors for sentencing, pursuing leniency from both angles.
After reaching a consensus with the client and their family, the lawyers made repeated contact with the investigating authorities. They submitted evidence—including the client’s email records, trading motives, and family circumstances—on three separate occasions, arguing that the client’s actions likely did not constitute a crime and that there was no necessity for detention. Through the lawyers’ persistent efforts, the client’s arrest application was denied, successfully securing their freedom in the first instance.
After the client was released on bail, the legal team continued its work. First, building upon the materials previously submitted, they further strengthened the evidence, comprehensively documenting the process by which the client made trading decisions after receiving the emails. They demonstrated that the rationale for the trades was unrelated to insider information and, using this as the core defense argument, submitted a legal opinion. Second, the team maintained ongoing communication with the prosecuting attorney, holding over a dozen discussions centered on the legal opinion. These discussions addressed whether the client had used insider information for trading and the legitimate reasons behind the client’s transactions. Even at the critical moment when the prosecution requested the defense counsel to appear and sign a plea agreement, the defense attorney continued to persuade the prosecuting attorney not to file charges. Moved by the attorney’s persistence, the prosecuting attorney agreed to reconsider the case. Furthermore, after the prosecuting attorney relented, the defense counsel coordinated with the client’s company to secure a written statement detailing the client’s work performance. Ultimately, the prosecuting attorney issued a decision not to prosecute.
This decision not to prosecute not only saved the client’s life and family but also provided valuable guidance for the defense in similar insider trading cases, demonstrating the professional integrity and the value of the defense provided by King&Capital Law Firm.
