The construction of the securities class action system with Chinese characteristics goes further
Must have "zero tolerance" for illegal crimes in the capital market
Zhou Lin, reporter of Economic Daily and China Economic Net
Financial fraud, insider trading, fraudulent issuance and other illegal and criminal activities are the "cancer" of the development of the capital market. In recent years, there have been a number of financial fraud cases of listed companies in the capital market, which have seriously damaged the legitimate rights and interests of investors, endangered the healthy and stable development of the capital market, and have extremely bad effects. Currently, "zero tolerance" for illegal and criminal activities in the capital market has become a consensus among all walks of life. The Financial Stability and Development Committee of the State Council has repeatedly emphasized "zero tolerance" for illegal behaviors in the capital market, and has proposed a series of "zero tolerance" specific measures, forming a "combined punch." Among them, strengthening civil compensation and establishing and improving the securities class action system are important measures.
On July 31, the Supreme People’s Court issued a judicial interpretation "Provisions on Several Issues Concerning Representative Litigations in Securities Disputes", which detailed the relevant provisions in the new Securities Law and more systematically stipulated the definition and trial principles of securities representative lawsuits , Jurisdiction, case filing, registration, notification, mediation, trial, appeal, execution and distribution, etc., establish the principles of efficient, transparent, convenient, and low-cost trial.
On the same day, the China Securities Regulatory Commission and the China Securities Small and Medium-sized Investor Service Center respectively issued the "Notice on Doing a Good Job in Investor Protection Institutions’ Participation in Special Representative Litigation in Securities Disputes" and "Special Representative Litigation Business Rules (Trial)". Institutions, registration and clearing institutions and other entities participating in special representative litigation have made detailed regulations to clarify the rights and obligations of insurance institutions and investors participating in the litigation.
So far, the construction of a securities class action system with Chinese characteristics has taken another step forward.
Standardize the representative litigation system
Recently, the Nanjing Intermediate People's Court of Jiangsu Province issued an announcement on the registration of securities dispute representatives of 4 Jiangsu listed companies including Chengxing Co., Ltd., listing two types of securities dispute litigation methods. One is that investors register in the court to participate in litigation, and the other is that the investor protection agency accepts more than 50 investors' entrustment and can participate in litigation on behalf of all injured investors (except for express withdrawal, that is, class action). Investors who are not registered , Can also be protected by law. These two methods have relevant provisions in Article 95 of the new Securities Law, which was officially implemented this year.
Huang Deqing, chief of the Financial Division of the Nanjing Intermediate Court, said that securities dispute cases involve a large number of people. If thousands of investors had sued before, the court would have to set up thousands of cases to try. After the representative litigation is adopted, only one case needs to be opened for trial against thousands of prosecutions, which not only greatly improves the efficiency of case trials, but also better protects the legitimate rights and interests of investors.
Shanghai Minglun Law Firm Wang Zhibin said that it has accepted more than 20 investors' entrustment, and more than 100 investors may join in the future. In the past, most shareholders did not actively participate in litigation because the procedures were cumbersome and costly, but the amount of compensation was not necessarily large. If the insurance institution acts as a representative to litigate, passive investors and investors who are not actively defending their rights can also be protected by law. The number of compensated investors has increased significantly, and the crackdown on listed companies in violation of laws and regulations will be greater.
This is just one aspect of the advantages of the representative litigation system. The judicial interpretation divides the securities dispute representative litigation into general representative litigation under the traditional joining system and special representative litigation under the declaration withdrawal system, and systematically stipulates the registration, preliminary review, representative selection, and mediation in representative litigation. Important operating procedures such as agreement confirmation, litigation trial and judgment, appeal system, effectiveness expansion, execution and distribution.
The judicial interpretation has made special provisions on the centralized jurisdiction, initiation procedures, rights registration, party declaration and withdrawal, litigation obligations of insurance agencies, litigation costs, property preservation, etc. of the general public concern for special representative litigation, which resolved many of the special representative litigation Practice problems.
Liu Guixiang, a full-time member of the Judicial Committee of the Supreme People’s Court, said that the class action system provides convenient and low-cost rights protection channels for small and medium investors whose rights have been impaired, and its compensation effect of "gathering sand into towers and gathering arms" can form criminal acts against securities laws. Strong deterrence and high pressure posture. The new securities law provides for special representative litigation of "implicit joining, express withdrawal". The judicial interpretation provides practical guidelines for the people's courts at all levels to correctly implement the law, unify the judgment standards, and improve the quality and efficiency of securities class actions by specifying specific procedural rules in detail, so that the securities class actions system can be implemented.
Reduce litigants' rights protection costs
Capital market dispute cases and litigation cases are characterized by a large number of people involved, strong professionalism, and large market influence. Investors use litigation and arbitration to resolve disputes with high costs, long periods, and unsatisfactory results.
How to do? In order to lower the threshold of litigation and the cost of safeguarding rights, the judicial interpretation clarified that the people's court shall support if the representative requests that the defendant who loses the lawsuit pay reasonable announcement fees, notification fees, and attorney fees. At the same time, it is clarified that both ordinary representative litigation and special representative litigation adopt the special authorization model. The representative can change, waive the litigation request or acknowledge the litigation request of the other party on behalf of the plaintiff, reach a mediation agreement with the defendant, and initiate or abandon the appeal.
Recently, the investment service center *ST Zhongan's support litigation was accepted by the Shanghai Financial Court. *ST Zhongan (listed company) is now called Zhonganke Co., Ltd. Public welfare lawyer Xu Xiao of the Investment Service Center represented investors to the actual controller of the listed company Tu Guoshen, the largest shareholder Shenzhen Zhongheng Huizhi Investment Co., Ltd., *ST Zhongan and its subsidiaries Zhonganxiao Technology Co., Ltd., and Yinxin Asset Evaluation Co., Ltd. Propose compensation.
"The litigation supported by the Investment Service Center has given relatively disadvantaged ordinary individual investors the hope of improving the efficiency of case trials and reducing litigation costs." Li Sheng, director of Beijing Zhipu Law Firm, believes that in the future, whether it is to protect the rights and interests of investors , Or the development of the rule of law and standardization of the entire capital market, will highlight the role of this judicial interpretation.
"The focus is on the operability of judicial interpretation, especially in the three aspects of'representative litigation initiation', right registration' and'representative election'." Li Sheng said that through the "representative litigation initiation", coverage can be achieved. Wide, low litigation costs, saving judicial resources, and solving mass disputes; through "rights registration", not only protects the rights and interests of investors, especially investors can register their rights online and join litigation without leaving home, but also Apply to the people’s court for supplementary registration before the opening of the first instance, and set up opposition and reconsideration procedures; the adoption of “representative election” not only respects the principle of civil autonomy, but also considers if the registered right holder has objections to the candidate or applies for the representative , The people’s courts should organize ballots and elections, so that the past difficulties in selecting representatives can be effectively resolved.
Protection of litigant rights
While improving the efficiency of representative litigation, the judicial interpretation also focuses on properly protecting investors' litigation rights and procedural interests, including the right to vote, the right to know, the right to object, the right to review, the right to withdraw, and the right to appeal.
In terms of voting rights, the judicial interpretation requires that one person, one vote be adopted for the election of representatives, which fully protects the interests of vulnerable groups. In terms of the right to know, the judicial interpretation stipulates that the representative shall promptly notify all plaintiffs of important litigation matters such as deciding to withdraw the lawsuit, reaching a mediation agreement, changing or waiving litigation claims, waiving or deciding to appeal.
The CSRC attaches great importance to the smooth operation of special representative litigation. According to Jiao Jinhong, the chief lawyer of the China Securities Regulatory Commission, the China Securities Regulatory Commission is fully supporting and cooperating with the people’s courts in the implementation of judicial interpretations, except that the Investment Service Center, as the main insurance agency that participates in the special representative litigation of the Securities Regulatory Commission, has formulated and issued special business rules. In addition, according to the division of labor arrangements, the insurance fund, another insurance agency in the CSRC system, is mainly engaged in data analysis, loss calculation, and assistance distribution during the pilot phase, which complements the investment service center, and then formulates business rules as needed.
In Jiao Jinhong's view, securities class actions are only one type of securities and futures diversified dispute resolution mechanisms, which do not affect the active role of other dispute resolution methods. The new "Securities Law" stipulates that insurance agencies "may participate in litigation as representatives." Insured agencies will follow the case screening mechanism in the business rules to initiate class actions in a timely manner for major cases with severe social impact.