The ordinary representative litigation has gradually entered the practical stage, but as a new system of special representative litigation (ie, the "Chinese version of the class action") has not yet been practiced. When it will land and where the first case will fall, it has attracted much attention.
Before landing, the factors considered by insurance agencies in choosing special representative litigation cases were also concerned by the market.
On September 4, at the 3rd Small and Medium Investor Service Forum, a number of experts conducted in-depth analysis and made recommendations on the selection of consideration factors for special representative litigation cases during the pilot phase.
Ye Lin, a professor at Renmin University of China Law School, believes that as a model litigation model, special representative litigation should focus on key cases and should not refer to all cases in general.
Zhang Wei, deputy dean of the Faculty of Law of Singapore Management University, also said that if limited law enforcement resources are not used to strengthen the deterrence, in the end, not only will the illegal activities that harm investors not decrease but increase, the cost of law enforcement may also rise steadily. .
Guo Li, a professor at Peking University Law School, said that the investment service center must follow the principles of statutory, public welfare and efficiency when selecting cases to participate in special representative litigation.
As far as the selection is concerned, it is recommended to focus on three factors: pre-research report, specific case situation and social impact.
"From the perspective of deterring potential illegal output, of course, we must choose cases that can bring significant social impact." Zhang Wei believes that there are probably two types of cases that are most likely to have such an impact. One is that the offenders fall from heaven to hell. The case is a case in which securities fraudsters can pay a large amount of compensation to bankruptcy; the second type of cases that can have a major deterrent effect are unexpected cases.
Follow the principles of statutory, public welfare and efficiency
According to Article 95, paragraph 3 of the Securities Law, special litigation representative litigation means that the investor protection agency is entrusted by more than 50 investors to participate in litigation as representatives.
According to this provision, the "Securities Law" rules mainly involve two aspects: one is to recognize the status of special representatives in litigation and to clarify the status of investor protection agencies; the other is to introduce a mechanism for investors to withdraw explicitly.
There are opinions in the academic circles that investor protection agencies should openly accept investor entrustment, and should initiate or even refuse to initiate special representative litigation when the number of investors meeting the legal requirements exceeds 50.
Ye Lin believes that this opinion is debatable. If a special representative lawsuit must be filed when there are more than 50 clients, it will undoubtedly limit the application of separate lawsuits and ordinary representative lawsuits, and even special representative lawsuits will replace individual lawsuits and ordinary lawsuits. The situation of representative litigation has further caused the imbalance of the three modes.
He also stated from the perspective of the investor protection agency that "public interest" does not mean compulsory acceptance of entrustment, otherwise the independence of the investor protection agency will be damaged.
In participating in representative litigation, investor protection agencies should form a good working mechanism based on public welfare, special status and independent judgment.
Zhang Wei has two reasons for choosing a case for the CSI Small and Medium-sized Investor Service Center (hereinafter referred to as the “Investment Service Center”). First, as a public welfare institution established by the state and supported by taxes, the Investment Service Center must Limited public financial resources are invested in the most effective public services; secondly, the ultimate goal of securities supervision, including the initiation of public interest securities class actions, is to deter violations.
"If deterrence is used as the main theme of securities supervision, then what the majority of investors can enjoy should be law enforcers to prevent problems before they occur, and to prevent speculators from taking advantage of such an interest. Reduce the probability of fraud and clean up the order of the entire capital market. Such an interest will be evenly distributed to all investors in the capital market, which can be said to be the fairest result." Zhang Wei said.
So, what principles should the investment service center follow?
Guo Li, a professor at Peking University Law School, said that the investment service center must follow the principles of statutory, public welfare and efficiency when selecting cases to participate in special representative litigation.
Zhang Wei believes that from the standpoint of deterring potential violations, the basic principle for the investment service center to choose to participate in the special representative litigation is to invest as little resources as possible to produce the greatest deterrence effect.
In other words, the investment service center should compare input and output, and give priority to cases with higher output than input.
"As the cost-benefit consideration of the investment service center's case selection principle, it refers to the comparison between the investment service center's own case handling costs and the deterrence benefits brought by the investment service center's own actions, and cannot be included in other institutions or individuals already invested The cost and the benefits already brought.” Zhang Wei pointed out that this is the inevitable conclusion that rational people look at the marginal principle of economics-whether the investment service center should participate in certain cases should only be based on its own behavior. How much contribution.
Build a fair and transparent selection mechanism
For the investment service center, whether the special representative litigation system can be effectively used to maintain the normal order of the capital market, so that the interests of small and medium investors can be effectively protected, the key step is whether it can choose appropriate cases to participate in the litigation.
Ye Lin believes that in case selection, insurance agencies should establish a fair and transparent selection mechanism, and make reasonable decisions and choices based on the social impact of the case, the probability of success, the typicality of the case, and the claims of the case, so as to improve the representative. Effectiveness of litigation operations.
Chapter 4 of the "China Securities Small and Medium Investor Service Center Special Representative Litigation Business Rules (Trial)" (hereinafter referred to as "the "Rules (Trial)") stipulates that the Investment Service Center shall decide whether to participate in a special representative litigation case Four steps need to be followed: preliminary screening-pre-research report-expert evaluation-final decision.
In the preliminary screening process, Article 16 of the "Rules (for Trial Implementation)" lists three main criteria: the first is "administrative penalties or criminal judgments made by relevant agencies"; the second is "typical cases, severe social impact, It has exemplary significance"; the third item is "the defendant has a certain solvency."
In the pre-research report link, Article 17 of the Rules (for Trial Implementation) specifies that the pre-research report should include four items including company information, case information, legal issues and other factors to be considered.
At present, the considerations listed in the expert evaluation link are relatively broad and need to be further focused in the future.
Guo Li believes that when grasping the standard of "the case is typical, serious, social impact, and exemplary", we can focus on "the case (whether) involves significant public interest".
This understanding helps to appropriately lower the threshold and expand the scope of optional cases.
For the same reason, it is recommended that the standard of "the defendant has a certain solvency" should be interpreted appropriately.
"From the perspective of deterring potential illegal output, of course, we must choose cases that can bring significant social impact." Zhang Wei believes that there are probably two types of cases that are most likely to have such an impact. One is that the offenders fall from heaven to hell. The case is a case in which the perpetrators of securities fraud can pay a large amount of compensation until the bankruptcy.
He also said that the second type of cases that can have a major deterrent effect are unexpected cases. "Maybe the overall social effect of this type of case is not as popular as the previous type, but it is a precision strike. For those who have illegal ideas, it is correct. For those who want to test the abilities of law enforcement officers, such precise strikes can most dissolve their fluke psychology."
"In order to find such a second type of case, the investment service center cannot follow the social impact that has already produced, and cannot let the people who violate the law catch the law of the investment service center. Therefore, the investment service center should not choose the case based on the industry. External indicators such as scale, stock price, reputation, etc. form a systematic tendency, but we should pay attention to whether there is suspicion of illegal activities." Zhang Wei said that the truly meaningful class action is as a mechanism to detect illegal activities independent of administrative supervision.
Regarding the pre-research report, Guo Li put forward two suggestions for improvement. One is to use alternative relief channels as a factor in the selection.
If investors can obtain relief more efficiently through institutional tools such as demonstration litigation and ordering repurchase, the investment service center may consider not participating in the special representative litigation.
The second is to use the probability of winning the case as a factor in the selection.
If after analyzing the legal disputes of the case, the Investment Service Center believes that there is little hope of obtaining compensation in the case, it may choose not to participate in the case and invest valuable resources in other cases.
In Guo Li’s view, the procedural value and functional positioning of the expert assessment link needs to be tested in practice. From the perspective of procedural convenience, it is recommended that the expert assessment link be an optional procedure rather than a necessary procedure. “Because in some cases, if the facts are clear and the law There is not much controversy, and experts are convened to further demonstrate that the auxiliary judgment of the evaluation may be limited."
Author: Huang Siyu