Research On Causality Of Civil Liability For Market Manipulation

Market manipulation, false statements and insider trading are three main manifestations of security infringements. Securities infringements is a special kind of civil infringement activities, due to the complexity of the securities market, the behavior of high-tech and other characteristics, it appears along with the character different from general civil infringement activity, thus securities infringements becomes the object which many scholars study at. Securities markets appears later than the general commodity trading market,and its trading rules and legal rules are in the exploratory stage; the development of China’s securities market is later than those in other countries, and the rules are mostly imported from the foreign countries. Due to the imperfections of legal law, dishonest of market participants and some other reasons, a lot of problems emerge in the development of China’s securities market, securities infringements is more rampant, also securities market manipulation is no exception. The market manipulation not only impedes the normal development of the securities transactions, damages the legitimate rights and interests of the majority of investors, but also hinders the healthy and orderly development of securities market. However, China investigate the responsibility for market manipulation is essentially limited to administrative liability and criminal liability, civil liability is almost blank. Throughout the various countries’judicial practice, the administrative liability and criminal liability shall not take precedence over civil liability, the damage carried by securities market manipulation to majority of investors is irreversible, but only rely on the civil liability can compensate for this damage, maintain the equitable development of the securities market is inseparable from the improvement of Civil Compensation System, and the identification of causality has become the major problem. The so called causality of Civil Liability for securities market manipulation, that is the causality between investors’damager fact and manipulate behavior of manipulators.In China, civil liability prejudication of securities market manipulation adopts necessary causality theory, namely, there is essential and inevitable contact between the damage fact of investors and manipulation behavior. Except for the necessary causality theory applied in practice, scholars mostly advocate to adopt Presumption of Reliance rule and Adequate Causality Theory. Presumption of Reliance rule comes from America, based on "Fraud on the Market Theory". After a long period of development, Presumption of Reliance rule is eventually established in United States, and becomes the most important rules to identify causality of civil liability for securities market manipulation. Some scholars suggest that China shall also use the Presumption of Reliance rule to identify the causality, and some scholars think that the rule does not have the applicable premise in China, namely semi-strong efficient market. Based on this, the scholars put forward the Adequate Causality Theory; Adequate Causality Theory is evolved on the basis of the Conditions Theory, and it is the main method to identify general causality in civil law. Whether the Presumption of Reliance rule and Adequate Causality Theory can be applied in China or not? And how should they be applied?The Supreme Court issued Several Stipulations Concerning the Trial of Civil Compensation Cases Owing to False Statements in the Security Market, then it ends the application of necessary causality theory in the identification of civil liability for false statement, also it lead to discussion on causality identification of false statement civil liability. Both of securities market manipulation and false statement are manifestation of security infringements, and belong to the same securities market, how will the identification of civil liability causality for stock market manipulation develop? The author bases on sorting out the status of civil liability’s causality identification for China’s securities market manipulation, judicial adjudication and scholars’theories, combined with identification rules of civil liability causality for general civil infringement activities and analysis of causality’s general type under securities market manipulation’s basic form, with a view to make a systematic exposition and analysis.