The securities class action system has been implemented and the "single fight alone" type of rights protection has become history
Macro trend
To protect small and medium investors is to protect the capital market.
A few days ago, in accordance with the relevant provisions of the Civil Procedure Law and the Securities Law, the Supreme Law issued the "Regulations on Several Issues in Litigation by Representatives in Securities Disputes" (hereinafter referred to as the "Regulations"), which will come into force on July 31, 2020. With the issuance of the "Regulations," the rights protection of capital market investors will usher in a new pattern.
The number of investors in my country's securities market has reached 167 million, of which 95% are small and medium investors. To protect small and medium investors is to protect the capital market. The new "Securities Law" that came into effect on March 1 this year, based on the reality of the capital market, innovatively introduced a securities class action system for the first time. However, the Supreme Law has not promulgated relevant regulations on practical issues such as the selection of litigation representatives, litigation procedures, solutions to practical problems in litigation, and how to register and confirm. Now this obstacle has been eliminated.
I personally think that before the introduction of the class action system, the shortcomings of rights protection were mainly manifested in many aspects. Such as the high cost of rights protection, the difficulty of rights protection, and the problems of expensive rights protection. A major feature of small and medium investors in the capital market is that they are relatively scattered and difficult to form cohesion. Moreover, problems such as difficulty in filing a case, difficulty in litigation, difficulty in holding a court, and difficulty in enforcement have often appeared in the previous rights protection of investors, which are mainly manifested as difficulty in rights protection. For investors with a small amount of rights protection, the high cost, lengthy process, and uncertainty of rights protection will itself discourage their enthusiasm for rights protection.
Moreover, even if rights protection is successful, there are often two phenomena of lack of "full coverage", that is, it is impossible to achieve "full coverage" for all investors whose interests have been impaired and "full coverage" for losses of rights protection investors. For fraudulent issuance cases such as Wanfu Shengke and Xintai Electric, even if investors have “advanced compensation” from securities firms when they are defending their rights, the investors’ rights protection has not reached 100%. In certain rights protection cases, the compensation paid to investors by listed companies is often discounted.
In addition, stock market investors' rights protection still has the problem of too narrow rights protection. At present, investors’ rights protection activities are mainly concentrated on the false statements of listed companies. This is mainly due to the judicial interpretations issued by the Supreme Law. Others such as the frequent insider trading in the market, market manipulation, and the transmission of the interests of listed companies to the investment Investors are still in an embarrassing situation in which they have nowhere to sue.
Over the years, the regulatory authorities have claimed to have "zero" tolerance for illegal and untrustworthy conduct. However, due to defects in system construction and other reasons, violators have not been severely punished and objectively have become the norm.
The securities class action system provides more convenient and lower-cost rights protection channels for small and medium investors whose interests have been impaired, while the Supreme Law’s "Regulations" make it more practical for investors to bring securities class actions. In other words, it will be easier for investors to protect their rights in the future. It is difficult and expensive to protect rights, as well as small and medium-sized investors who give up rights and remedies and do not want to sue, do not want to sue, and cannot sue. The phenomenon will be fundamentally alleviated.
The promulgation of the "Regulations" will also help substantially increase the cost of violations. The securities class action system will fundamentally change the investor’s rights protection model. Previously, individual investors’ “single fight” type of rights protection will become history. Moreover, since the class action involves a large number of investors and adheres to the principle of "implied entry and express exit", while the rights and interests of investors are protected, the price paid by violators will be very huge.
On the other hand, the promulgation of the "Regulations" can not only have a deterrent effect, but will also have a profound impact on the healthy development and long-term stability of the capital market. The "Regulations" issued by the Supreme Law actually means that securities class actions have entered the stage of actual operation. Moreover, according to the "Regulations", securities market misrepresentation, insider trading, market manipulation and other violations of laws and regulations have been included. The situation that investors' rights protection involves too narrow coverage has been changed, and the deterrent effect on market violations is self-evident. of.
□Cao Zhongming (financial commentator)