The Analysis Of Relief Approaches Available To Small Investors

All through the time, the medium and small investors in the listed companieshave been staying in the delicate status because of the inequality of the positionscompared with those holding shareholders, the dissymmetry of the information, andthe difficulty in achieving real voting, etc. Therefore, the protection of the mediumand small investors is the very concern by both the Law of Securities and thesupervisory institutions. Along with the revision and wide-soliciting of the publicopinions on the Law of Securities, as well as the issuing of The General Office of theState Council’s Guidelines on the Further Protection on the Legal Rights andInterests of the Medium and Small Investors, the medium and small investors havebecome again the focus of the discussion and attention on the market. Ensuringeffectively the legal rights and interests of the investors needs, on one hand, we needthe rigid execution of laws, serious suppress and punishments over any illegitimateor faith-breaking behavior, forming an integral protection of the investors’ interests;on the other hand, we need the making-up of the loss of the investors due to thosedeeds against laws and trusts and realizing of the individual protection on the singleinvestor. According to the existent executive system of laws, the above legal aim ismainly reached through the ways of both the penalties conducted by the publicpowers through the administration and the civil compensation by the private rightsthrough the relief.At present, there are mainly two relief approaches adopted for protecting themedium and small investors: one is the litigation, and the other is the securitiesenforcement system through the securities law. The litigation can be classified intotwo categories: the direct action and the shareholder representative litigation. Amongthose cases of violation against the securities law, the medium and small investors often take the form of concurrent actions, representative litigation or class suit in thedirect action.Because the public and the private differ from each other in the aspect of legalprocedures, the former has the inextricability on the compensation, which is mostlyconcerned by the investors; whilst, the civil action has its shortcomings of high coston right vindication and difficulty in quoting, and even the effect of relief is hard tobe ideal.The cases of vindication for investors’ interests on the securities market havetheir own characteristics such as the legion of the concerned, the wide-involvementand the relatively small target of single case. Along with the development ofpaper-freeing and electronization deals on the securities market, theevidence-collecting is relatively difficult. Each case will occupy a lot of manpower,material resources and financial costs. Facing these fresh and blood problems, manycountries and regions abroad have adopted the system of the securities enforcementsettlement in the execution of securities laws, which balances preferably thedemands from both the administration and loss compensation of the investors. TheSystem of the securities enforcement settlement is an introduced one whichbelongs to one kind of ADR mode (Alternative Dispute Resolution system，ADR，i.e. the mechanism of alternative solution for the disputes.). It is one of the earliestadopted systems in the American administrative procedure law and then absorbed orreferenced by the UK and Hong Kong which belong to the Anglo-American LegalSystem, and Germany as well as Taiwan of our country which belong to thecontinental legal system. Serving as one part of the administrative reconciliationsystem, the securities enforcement settlement system comes from the theory ofsettlement of contract in the field of private laws. To introduce the justice of thesettlement of contract into the securities administrative execution of the ‘Wanfu Shengke’ case from the view of contract is one of the effective attempts on theinvestors’ protection, which releases a positive energy in the field of the securities’inspection. This paper will apply the method of comparative analyzing to make astudy on two relief-approaches for the medium and small investors, i.e. the litigationsystem and the securities enforcement settlement system through the administrationof securities law. At the end, some suggestions will be put forward for theimprovement of the two legal systems on the medium and small investors’ protectionthrough the analysis of two actual cases of Yin Guangxia and Wangfu Shengke (twolisted companies). On one hand, it is expected to make an improvement in thelitigation system by the ways of deleting some of the pre-set regulations in the areaof direct actions and absorbing the reasonable aspects from the class actions. On theother hand, it is expected to establish the securities enforcement settlement system inour country at the level of legislation, thus to provide the inspection institutions witheffective accordance. Putting forward the securities enforcement settlement systemwhich suits the situation of the country will be beneficial for the protection of therights and interests of the medium and small investors, and for the functionalternation of the inspective institutions. With the mutual compensation of the twosystems, the protection of the medium and small investors will be sure to be realizedwith more approaches and at multi-levels, and further to ensure the securities marketof our country to develop harmoniously, steadily and healthily.