Zhang Ye, member of the National Committee of the Chinese People's Political Consultative Conference: Accelerate the establishment of an implementation mechanism for the distribution of civil compensation liabilities in the securities market

Source: Shanghai Securities News

Strengthening the construction of the rule of law is one of the important tasks of the high-quality development of the capital market during the "14th Five-Year Plan" period. Zhang Ye, member of the National Committee of the Chinese People's Political Consultative Conference and deputy director of the Science and Technology Supervision Work Committee of the China Securities Regulatory Commission, said in an interview with a reporter from the Shanghai Securities News a few days ago that it is necessary to speed up the establishment of an implementation mechanism for the distribution of civil compensation liability in the securities market from four aspects, such as establishing the order of civil compensation liability for pursuing responsibility for the "first evil," improving the mechanism for determining the defendants in securities civil lawsuits, clarifying the specific principle of the proportion of compensation liability borne by all parties, and clarifying the requirements for determining the fact that the fault of joint and several liability is to be determined.

Zhang Ye said that the new securities law has improved the civil compensation liability for securities tort, especially the joint and several civil compensation liability of controlling shareholders, actual controllers, intermediary institutions and relevant personnel in fraudulent issuance and misrepresentation, which has significantly increased the cost of securities violations. However, the new Securities Law does not directly stipulate how to distribute civil compensation liability among various types of responsible entities, and the relevant judicial interpretations have not yet made clear, specific and consistent provisions on this.

Zhang Ye believes that in order to implement the law enforcement concept of "zero tolerance" and promote the strengthening of the responsibility of intermediary institutions, it is necessary to accelerate the improvement of supporting system rules and create conditions for steadily promoting the reform of the whole market registration system. He said that relevant departments should consider in-depth research and accelerate the establishment of an implementation mechanism for the allocation of civil compensation liabilities in the securities market, revise and improve the "Several Provisions on the Trial of Civil Compensation Cases Caused by False Statements in the Securities Market" and "Minutes of the Symposium on the Trial of Bond Dispute Cases by Courts Nationwide" and other judicial interpretation documents to accurately punish securities violations.

Specifically, Zhang Ye made suggestions from the following four aspects:

First of all, it is necessary to establish the order of civil compensation liability for pursuing responsibility for the "first evil". Controlling shareholders, actual controllers, directors, supervisors, securities companies and service institutions are all subject to joint and several liability, but the reasons and degree of liability caused by the acts of each entity are not the same. In practice, based on the civil compensation capacity of each entity, the injured investor actively exercises the right of claim against "large households" such as intermediaries, which may lead to a mismatch between the actual liability and the behavior and the degree of fault. In the relevant judicial interpretations, it should be clearly determined that responsibility shall be determined in the order of the issuer, the controlling shareholder, the actual controller, the director and supervisor, the securities company, and the service agency.

Second, it is necessary to improve the mechanism for determining the defendants in securities civil litigation. There are differences in the scope of the subjects of false statement liability identified by administrative penalties and judicial adjudications, and some intermediary institutions that have not been subject to administrative penalties are identified as civil compensation liability subjects based on the joint and several liability mechanism, which will lead some intermediary institutions to bear unbalanced administrative and civil liabilities based on the same behavior. In order to maintain the consistency and fairness of the logic of accountability, a mechanism for determining the defendant that is consistent with the logic and scope of responsibility for administrative punishment shall be established in the judicial interpretation, allowing the people's court to list the responsible subjects who have not been prosecuted and are in order of responsibility as defendants in accordance with the above-mentioned order of responsibility.

Furthermore, the specific principle of proportional liability of the parties should be clarified. According to the principle of equal rights and responsibilities and equal punishment, the compensation liability borne by different responsible entities should match the degree of their tortious acts and subjective fault. Consideration should be given to making it clear in judicial interpretations that the people's court should clearly determine the proportion of compensation liability of each subject based on the circumstances of each subject's illegal conduct, the degree of subjective fault, and the causal relationship between it and the loss caused by the false statement.

Finally, the requirements for determining the presumption of fault in joint and several liability should be clarified. In a small number of judicial judgments, the people's courts have a general presumption, that is, starting from the fact that the issuer has misrepresented the fact that there is a false statement itself, directly infers that the intermediary institution is at fault, and does not identify and respond to the evidence that the intermediary institution is not at fault. Consideration should be given to providing in judicial interpretations that the people's court should fully demonstrate and reason the civil liability of all parties in the judgment document in light of the facts of the case, especially to fully determine and respond to the evidence that the party is not at fault in the presumption of fault.

【Error correction】【Responsible editor: Yang Xiaobo】