A Study On China's Civil Compensation System Of Security Tort

Through over ten years rapid development , China securities market has made great progress . It has improved the reform of investment and financing system , enlarged the scale of direct financing and solved the under capitalization problem of many listed companies , promoted the industrial restructuring and rationalization of social resource . Now China security market has become an important channel for international capital to entering China .At the same time , many illegal problems , such as inside dealing , manipulating markets , and misrepresentations occurred from time to time since the formal foundation of securities market , which resulted in huge economic losses for small and medium investors . One of the major reasons for these securities frauds is without civil compensation system of security tort in China security market . Because of attaching importance to regulating the securities market by public laws , looking down on and being short of regulating the securities market by civil laws , the legal system only consisting of criminal liability and administrative liability has proved to be obviously inadequate , the law vacuum in the security market also appeared . The serious shortcoming exists in civil responsibility system of securities law , in which insider trading , manipulation market , cheat customers and other illegal acts which infringes upon the middle and small investors' interest , which mainly bears the criminal and administrative responsibility . The damaged investors don't get law succour . Protection of the rights and interests of the investors becomes an eternal subject of the development of the securities market . The establishment of civil liability system for securities frauds will play an important role in protecting invertors' interest and promoting the regular development of securities market .The main functions of China security civil compensation mechanism are to safeguard the principles of the fair , open and just , to compensate losses ,to recover damages , to repair the violated security regulations , to prevent illegal activities in security market and so on .In view of these , in this paper , the author consider it as civil liability for special tort but not liability for contract breach , because it will be more helpful for the investors suffering losses to obtain compensation by law and to maintain the legal interests of the investors .How to obtain the social fairness and to maintain the security of the capital market has been a recent topic arousing general interest in all walks of life . At present stage , it is urgently necessary to alter the traditional law idea – valuing public law above civil law , reconstruct and improve China's civil compensation system of security tort . This paper will give some comments on such major aspects as civil subject , the illegal activities , subjects sides , the limitation of actions , procedural way , principles of conviction , causality and damage determination , etc . Consequently , the following should be considered :1. reform and amend the concerned legal system; 2. endow the investors with right to form association ; 3 . break through the established procedural system to set up class action and Shareholders' Derivative Suit ; 4. build relative material guaranty system , such as Capital Stock Insurance , Directors&Officers Liability Insurance , etc . Only perfecting China's civil compensation system of securities tort can China security market get further development and growth .