Journal of Research and Development in Comparative Law

Journal of Research and Development in Comparative Law

A Comparative Study of the Disgorgement of Profits from Insider Trading in Securities Markets: A Case Study of the Capital Markets of Iran and the United States

Articles in Press

Document Type : scientific research paper

Authors
nima alijannejad 1
mohsen raeisi 2
1 Ph.D. in Private Law and Capital Market Law Researcher, Tehran, Iran
2 The Imam Hossein Comprehensive University, Tehran, Iran
10.22034/law.2025.2062434.1660
Abstract
The use of insider information in the stock market—commonly referred to as insider trading—is a clear violation of informational fairness and undermines public trust in the integrity of capital markets. In addition to criminal and disciplinary sanctions, one of the most effective tools in combating this phenomenon is the issuance of disgorgement orders by adjudicative bodies, compelling the return of illicit gains derived from insider trading. The implementation of such a mechanism, however, requires the existence or enactment of robust and deterrent legal provisions. From an Islamic jurisprudential perspective, and based on Quranic principles, Prophetic tradition (Sunnah), and rational reasoning, there is no doubt among jurists regarding the obligation to return assets acquired through illegitimate or unlawful means. In statutory law, although some general or case-specific provisions exist, the realm of capital market law lacks explicit and comprehensive regulations addressing this issue. This legislative gap can result in the neglect of a crucial legal mechanism and consequently diminish its effectiveness and deterrent impact. In contrast, U.S. securities law places significant emphasis on the disgorgement of unlawful proceeds obtained through insider trading. Over time, this concept has been repeatedly addressed through both legislative action and judicial rulings, with each iteration reinforcing its effectiveness and authority. Accordingly, this article aims to examine the topic in depth—drawing on both domestic and international sources and literature—to underscore the necessity of establishing clear and comprehensive regulations regarding the mandatory disgorgement of illicit gains from insider trading in Iran’s capital market. Whether through the enactment of new provisions or the amendment of existing laws, such reform is essential. The vitality and efficiency of the capital market ultimately hinge on public confidence that the investment environment is under vigilant oversight, and that any individual who unlawfully enriches themselves through misconduct or criminal activity is obligated to return the resulting gains.
Keywords
Disgorgement
Profits
Illicit Gains
Insider Trading
Capital Market
Securities Exchange
Inside Information

Subjects

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Journal of Research and Development in Comparative Law

Articles in Press, Accepted Manuscript
Available Online from 22 September 2025