我國財務資訊不實刑事責任之法律適用疑義與重大性要件

Translated title of the contribution: The Materiality Element of Security Fraud and Misrepresenting Financial Information

Research output: Contribution to journalArticlepeer-review

Abstract

The criminal liability of misrepresenting financial information in Taiwan are
regulated mainly in Article 171 Paragraph 1 Section 1, Article 174 Paragraph 1 Section 5 of the Securities and Exchange Act, Article 71 of the Business Entity Accounting Act, and Article 215 in the Criminal Code. Confusion arises when applying these four articles. For example, what are the mens rea requirements? What kinds of documents are included in these articles? How should “financial or business documents” be interpreted? Also, Article 171 Paragraph 1 Section 1 and Article 174 Paragraph 1 Section 5 of the Securities and Exchange Act subjects “financial reports” to regulation, but there is a disparity in the sentences of these two articles. These issues require clarification. Moreover, commentators believe that there should be differences in terms of both quantity and quality between criminal punishment and administrative penalty. In American law, an element of “materiality” is required to be found liable of the misstatement or omission of financial statement. In Staff Accounting Bulletin: No. 99 (SAB 99), the SEC proposed a mixed standard that requires an evaluation of both quantity and quality. The quantitative standard recognizes that if the misstatement or omission of an item falls under a 5% threshold of the total amount involved the financial statement, then the misstatement or omission is not material. The qualitative standard mandates that even when the misstatement or omission of an item falls under a 5% threshold, the material element may still be satisfied if such conduct impedes the fulfillment of legal and contractual obligations, or conceals illegal transaction. Using the material element as a filtering factor to the criminal liability about the misstatement or omission of financial statements limits the scope of punishment. However, issues still exist on the application of Article 171 Paragraph 1 Section 1 and Article 174 Paragraph 1 Section 5 of the Securities and Exchange Act. These two articles share similar elements but provide different sentences. To reconcile between these two articles, this paper argues that Article 171 Paragraph 1 Section 1 should be limited to “the prospectus or other items that should be publicly declared.” On the other hand, Article 174 Paragraph 1 Section 5 should be limited to “other” financial or business documents. The Taiwanese criminal system inherits mainly from the European legal system, but the regulations of security related crimes are transplanted from the U.S. The legislature should be aware of the conflict between the two systems. A comprehensive review and a new proposal are needed to the future legal reform.
Translated title of the contributionThe Materiality Element of Security Fraud and Misrepresenting Financial Information
Original languageChinese (Traditional)
Pages (from-to)131-164
Number of pages34
Journal證券市場發展季刊
Volume28
Issue number3
DOIs
StatePublished - 2016

Keywords

  • Security fraud
  • Financial statement
  • Materiality
  • Business document
  • Criminal liability

Fingerprint Dive into the research topics of 'The Materiality Element of Security Fraud and Misrepresenting Financial Information'. Together they form a unique fingerprint.

Cite this