On July 24, 2026, the Supreme People's Court and the Supreme People's Procuratorate jointly issued a decision to amend the "Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Insider Trading and Disclosure of Inside Information," further moving forward the starting point for calculating the sensitive period of inside information. The amendment newly provides that the time when controlling shareholders, actual controllers, or relevant decision-makers disclose preliminary intentions to form inside information to closely related persons, or the time when they conduct related transactions accordingly, shall be deemed the initial time of the proposal. This amendment legally constructs "preliminary intentions" as the starting point of the proposal, significantly advancing the regulatory time point of the sensitive period. Combined with the two rigid presumption rules in the 2012 Interpretation, criminal defense in insider trading cases now faces unprecedented difficulties. As lawyers who have long been engaged in the defense of commercial crime cases, we believe that although the new regulation tightens the legal net, pathways to acquittal still exist, and the key lies in accurately grasping the symmetrical logic of substantive interpretation. This article will analyze from four aspects: the trend of expansion of the sensitive period,

I. The Trend of the Sensitive Period Moving Earlier: From Case-by-Case Adjudication to Normative Confirmation

The new regulation is not凭空创设, but rather formalizes the substantive interpretive logic rules that already exist in judicial practice. As early as 2009, in the Liu Baochun case (database entry number: 2024-04-1-120-001), the Nantong Intermediate People's Court of Jiangsu Province determined that the sensitive period begins when the initial draft of the "Cooperation Framework" established the core direction, and although the specific plan underwent several revisions, "the overall approach was determined from the very beginning." In the 2014 Jiayingde case [(2018) Yu 01 Criminal First Instance No. 31], the First Intermediate People's Court of Chongqing determined that the time of receiving the email containing the preliminary asset restructuring plan constituted the formation of inside information, on the grounds that the plan had a high probability of being translated into actual execution and possessed substantive identity with the final plan. In the 2021 Du case [(2024) Zhe Criminal Final No. 173], the Higher People's Court of Zhejiang Province determined that the internal reporting plan constituted the starting point of the sensitive period, and even though the plan was not submitted for board review due to abnormal stock price fluctuations, the group did not veto it and continued to advance it, so the sensitive period was not interrupted.

These three typical cases clearly outline the evolutionary trajectory of the starting point calculation for the sensitive period: from the framework draft, to email delivery, and then to internal reporting, each forward shift employs the adjudicative approach of "piercing through form, grasping substance." The new regulations elevate this consensus into normative expression, meaning that future judicial practice will apply the forward-shifting rule more uniformly and strictly. For defense lawyers, understanding this trend is a prerequisite for formulating effective defense strategies.

II. Stacking of Presumption Rules: Practical Dilemmas in Insider Trading Defense

The two presumption rules established in Article 2 of the 2012 Interpretation are extremely devastating: First, if close relatives or persons with a close relationship to an insider who knows inside information engage in related transactions during the sensitive period, and the trading behavior is clearly abnormal without justifiable reasons, it is directly presumed that they used the inside information. Second, if a person engages in related transactions after communicating

In practice, the dilemma faced by defense counsel lies in the fact that the flexibility of the sensitive period makes the starting point difficult to define precisely: a single mention at a dinner or a vague email may trigger the sensitive period. Moreover, the one-way operation of the presumption mechanism makes the threshold for rebuttal extremely high—how does one prove that inside information was not used? How does one prove that trading decisions were unrelated to inside information? In the Du case, the sensitive period lasted as long as ten months. The defense argued that the shelving of the plan should have interrupted the sensitive period, but the court rejected this on the grounds that the plan was "not abandoned and continued to advance." This serves as a warning: against the backdrop of the ever-expanding sensitive period, the space for formal defense has been nearly completely compressed.

However, just as substantive interpretation is applied when establishing guilt, the same dimension of substantive consideration should equally apply when acquitting. The principle of legality requires symmetry—when judicial authorities penetrate formalities to establish guilt, defense counsel may also penetrate formalities to seek substantive grounds for acquittal.

3. Five Major Paths to Acquittal: From Substantive Interpretation to Evidentiary Defense

Facing the dual pressures of the earlier sensitive period and the presumption rules, defense lawyers must construct a path to acquittal from the following five dimensions:

**Path One: Challenging the Substantive Basis for Calculating the Sensitive Period.** The new regulations use "preliminary intention" as the starting point for calculation, but "preliminary intention" itself is highly flexible. Defense counsel should examine whether this intention possesses a high probability of transforming into actual execution, and whether it reaches the substantive threshold of a "motion." If it merely involves general discussion, lacks a specific plan, or has no advancement actions, the sensitive period should not be deemed to have commenced. Referring to the Jiayingde case, the court emphasized "high probability" and "substantive identity," and defense counsel can rely on this to argue that the preliminary intention lacks certainty.

**Path Two: Severing the Causal Link Between Trades and Inside Information.** The presumption rule allows rebuttal, so defense counsel should actively present evidence to prove that trading decisions were based on independent judgment, public information, or pre-existing investment plans. For example, if the trades are consistent with the party's historical trading habits, supported by clear investment analysis reports, or unrelated to market reactions after the inside information was disclosed, the basis for the presumption can be weakened. In the Liu Baochun case, the defense failed to provide such evidence, leading to an adverse outcome, which conversely demonstrates the importance of evidence preparation.

Path Three: Argue that the trading conduct does not constitute "obvious abnormality." The presumption is premised on the trading conduct being "obviously abnormal." The defense may compare the client's past trading frequency, amounts, and timing to demonstrate that the transaction in question falls within the normal range. If there is a considerable interval between the trading time and the time of contact or communication, the trading volume accounts for only a minimal proportion,

Path Four: Claiming the Sensitive Period Was Interrupted or Never Formed. Although the new regulations move the starting point earlier, the sensitive period is not immune to interruption. If a preliminary intention is clearly rejected, the project is completely terminated, or personnel changes alter the decision-making path, the sensitive period may be interrupted. Defense counsel should gather evidence to prove that the project has effectively stalled

Path Five: Invoking

IV. Practical Suggestions for Lawyers: Compliance First, Defense as Supplement

After the implementation of the new regulations, the criminal risk of insider trading has significantly increased, and companies and individuals must prioritize compliance. For controlling shareholders, actual controllers, and directors, supervisors, and senior management of listed companies, a strict information confidentiality system should be established, and decision-making procedures for major matters should be standardized to avoid disclosing any preliminary intentions to closely related personnel before the formal resolution is made. In the early stages of major matters such as mergers and acquisitions, restructuring, and asset injection, they should be regarded as sensitive periods, and the trading activities of all related personnel need to be cautiously evaluated.

For entities already involved in a case, it is recommended to engage a professional criminal defense lawyer at the earliest opportunity. The lawyer should comprehensively review evidence regarding the commencement of the sensitive period, examine the applicable basis of presumption rules, and construct a defense system from the perspective of substantive interpretation symmetry. At the same time, emphasis should be placed on communication with regulatory authorities to strive for risk resolution during the administrative investigation stage. The Commercial Crime Defense Team of Guangdong Zhiming Law Firm has深耕多年 in financial and securities crimes such as insider trading and disclosure of inside information, having represented numerous major and complex cases. It is familiar with CSRC investigation procedures and court adjudication logic, and can provide clients with full-chain legal services ranging from compliance consulting to criminal defense.

The legal boundaries of insider trading are continuously being clarified and tightened. Understanding, respecting, and properly utilizing the rules are fundamental for market participants to achieve long-term stability and success in the capital market.