On The Functional Coordination Of Securities Legal Liability Regime

The significant increase in administrative liability for securities market violations is one of the main "highlights" of the amendments to the Securities Law in 2019.In order to maintain coordination with this,the Amendment XI to the Criminal Law adopted in 2020 has on the one hand increased the statutory penalties for the offences of fraudulent issuance of securities and irregular disclosure or non-disclosure of material information,demonstrating the aspect of the Criminal Law as the safeguard of the Securities Law;on the other hand,the phenomenon of criminal liability for the offences of fabricating and disseminating false information on securities and futures trading being lighter than administrative liability has not been amended,demonstrating the aspect of independent evaluation of criminal liability for securities offences.It can be said that the Criminal Law,as amended by the Amendment XI to the Criminal Law,has not fully achieved coordination with the Securities Law.At the same time,the failure of the principle of priority of civil liability for illegal act in the securities market under the legislation in judicial practice has long been criticized by academic and practical circles.The fragmentation of the legislative provisions and the different implementation mechanisms have led to the dysfunction of civil,administrative and criminal liability for securities market violations in practice.In view of this,this article is devoted to the study of the functional coordination of securities liability regimes,to clarify the functional positioning of securities liability of different nature,to explore the appropriate model of achieving the functional coordination of securities liability regimes,and to systematically discuss the concrete ways to achieve the functional coordination of securities liability regimes from two aspects of substantive law and procedural law respectively.The full text consists of three parts:the introduction,the body and the conclusion,with the body consisting of five chapters.The introduction focuses on the problem awareness of the thesis,systematically explains the background and research value of this paper,reviews and evaluates the current research status of this topic at home and abroad,designs the argumentative ideas and research methods of this paper on this basis,and clarifies the research characteristics and innovations of this paper.The problem awareness of this paper is based on the legislation and judicial practice in China,but the analysis and argumentation of the problem are not limited to the legal context of China.Therefore,the main body of the paper discusses five aspects,including the generation of the problem of dysfunction of the securities liability regime,the model of coordination of the functions of the securities liability system and its realization in substantive law and procedural law,as well as the problems and improvement of the relevant legal system in China.The first chapter provides a comprehensive account of the issues underlying the functional coordination of securities liability regime.The incomplete and asymmetrical information in the securities market makes an "efficient capital market" desirable but impossible to achieve,the high contagiousness of financial risks justifies state intervention in the securities market,and the granting and limiting of governmental powers by law lays the foundation for the establishment of a securities liability regime.As an emerging area of legal regulation,the legislative model of securities liability regimes in the world’s major countries has gradually converged:formulate a special securities(financial)law and comprehensively stipulate civil,administrative and criminal liabilities.In the "three-legged" securities legal liability regime,civil liability is mainly responsible for remedial functions,while administrative and criminal liability are mainly responsible for punitive and preventive functions.In the process of implementing the law,the multiple securities liability regimes have "gathered in form but not in spirit",manifesting themselves in the imbalance of civil liability,the continuous expansion of administrative liability,and the imitation of criminal liability.In order to pursue the "integration of form and spirit" of the securities liability regime,it is necessary to coordinate the securities liability regime with a holistic and systematic approach on the basis of an accurate definition of the functions of different types of legal liability.In terms of substantive law,securities liabilities should be reorganized in a functionalist manner,and in terms of procedural law,the interface between administrative enforcement and civil and criminal litigation in the securities market should be improved.The second chapter systematically discusses possible models for achieving functional coordination of the securities liability regime.The most basic function of securities civil liability is to fill up damages and provide relief to investors,and the exemplary effect of judicial decisions and the introduction of a punitive damages system can make it "overflow" to the market order control function;securities administrative liability was born out of the realistic need for the state to intervene in the securities market and to construct and maintain the market order,thus maintaining the order of the securities market is its most basic function,and the interests of investors are embedded in the market order of honesty and credit.Securities offences include both offences against the interests of investors and offences against the order of securities markets.The function of securities criminal liability is positioned to provide the entire securities market system with an undistributed but bottom-line and backstopping overall protection.Although coordinating the entire securities liability regime by a single legal liability lead can,to a certain extent,achieve the two main goals of protecting the interests of investors and maintaining the order of the securities market,it faces the problems that the theory is difficult to be self-consistent and the regulatory effect is "malnutrition".In this regard,under the unified analytical framework of the "demand theorem" of securities market legal regulation,the three types of securities legal liabilities that have different functions and orientations can complement each other’s disadvantages in a "triune" cooperative regulation model in the shape of a "reverse triangle".The third chapter focuses on the realization of the functional coordination of the"triune" of securities liability regime in the substantive law.Given the status of investors as the "source of living water" in the capital market,administrative securities liability should be used to promote civil liability.Administrative enforcement reconciliation and administrative public compensation are concrete ways to achieve this goal,with the former setting "having compensated or promised to compensate investors"as a basic condition for administrative reconciliation,and the latter incorporating administrative enforcement fines into a fair fund to pay out to injured investors.Administrative and criminal securities liability as the legal liability in public law should be complementary and coordinated:criminal securities liability should guarantee the fulfilment of administrative securities liability,while at the same time providing absolute judicial reserve for penalties related to basic human rights.The principle of"administrative priority and criminal support" is the basic principle to be followed while imposing public legal liability to violators,and the principle of "limited ne bis in idem" is the principle to be adhered to in determining the penalties for the two types of public legal liability.The imposition of criminal liability reduces the willingness and economic strength of securities offenders to compensate investors at present and in the future,and the incentive mechanism of criminal liability should be tapped to promote the realization of civil liability.Specifically,the restorative criminal justice system should provide an incentive for perpetrators to actively compensate investors who are victims of securities crimes with a moderate reduction in criminal liability,and at the same time,investors whose basic livelihoods are in distress because of their inability to obtain compensation from the securities offenders should be included in the scope of national rescue system.The fourth chapter focuses on the realization of the functional coordination of the"triune" of securities liability regime in the procedural law.In the coordination betweencivil litigation and administrative enforcement in the securities market,the role of the administrative authority is to act as a professional supporter,pre-screening securities class actions and providing professional support for "approved" class actions while preventing abuse of civil action.To achieve coordination between the administrative and judicial authorities,a two-way information and communication mechanism should be established,based on the basic principles of judicial respect for the administration,efficiency first and justice second.The interface system between administrative enforcement and criminal litigation needs to focus on the transfer of cases and the transformation of evidence.The transfer criteria should be formulated with reference to the criminal filing standards,an internal control mechanism should be established,and to coordinate the two implementation procedures of public law with "parallel procedures and entity deductions”.In terms of the transformation of evidence between administrative enforcement and criminal proceedings,physical evidence should be reviewed in terms of the evidence collection process,while oral evidence should be recollected in accordance with the standards of criminal evidence.Civil-criminal crosscases in the securities market are the kinds of "conflict-related"| civil-criminal crosscases,and the trial procedure of "civil first,criminal second" should be adopted.The civil action attached to criminal lawsuit system should be reformed to give full play to the advantages of criminal characterization and to ensure that civil liability is realized through the imposition of penalties.In the implementation stage,criminal income refund system,system of suspended deposit and application for refund foe securities crime forfeitures should be established or improved to ensure that the victimized investors are fully compensated.The fifth chapter specifically analyses the dysfunctional problems of China’s securities legal liability regime and explores the coordination scheme.There are functional obstacles in the configuration of substantive law and structural deficiencies in the procedural law mechanism of China’s securities liability regime,which has led to a serious deviation between the legal text of the securities liability regime and market practice.In this regard,a "triune" structure in the shape of a "reverse triangle" should be used to coordinate multiple securities liabilities.In terms of substantive law,a nofault liability and joint and several liability should be adopted to improve the supporting system for civil claims by injured investors,a "light administrative liability" regulatory approach should be adopted to realize the transition of securities market rules from"constructive" to "endogenous".In addition,a restorative criminal justice system and a"administrative first,criminal second" system should be adopted to realize the back-up protection of the interests of investors and the order of the securities market.In terms of procedural law,the civil securities litigation system needs to be facilitated and transformed,and professional financial courts need to be formed to enhance the professional ability of the people’s courts to hear securities infringement cases.At the same time,the Securities Law should integrate all legal liability norms of public law to guarantee the transfer of cases,and facilitates the procedural connection of cases with the transformation of evidence from administrative enforcement into criminal proceedings.As to the civil-criminal cross-cases in the securities market,the"determining the nature of the offence by the criminal constituent elements,determining offender’s liability by its compensation to investors" model and the "prescreening before enforcement" system should be used to ensure the realization of investors’ civil interests.