The Study Of The Civil Compensation For Securities Misrepresentation

In the securities markets of the world, the misrepresentation of the public companies,which violates the investors’ interests, has been reported again and again. SecuritiesMisrepresentation not only disrupts the normal order of the securities transactions, also causesmany investors, especially the small and medium-sized investors huge economic losses. Whenthe securities market has just been established in our country, the administrative supervisionand criminal penalties on Misrepresentation (in this article, Misrepresentation refers to thesecurities misrepresentation) have been thought highly, while the civil compensationlegislation not, resulting in the lack of the civil compensation legislation and the trialexperience on Misrepresentation. It was not until January15th,2002that Notice on theAccepting and Hearing the Civil Compensation Cases of the Security Misrepresentation(hereinafter referred to as Notice), was published, which broke the deadlock that the courtrefused to accept and hear the civil compensation cases of the security. Provisions onAccepting and Hearing the Civil Composition Cases of the Securities Misrepresentation Madeby Supreme People’s Court (hereinafter referred to as Regulations), which makes someprovisions on both procedure and entity of the civil compensation cases of SecuritiesMisrepresentation, based on Notice, was put into force On February1st,2003. Theseprovisions have made the securities investors, who suffer much, see the hope, and also haveprovided a legal basis for the dispute at trial. Furthermore, the legal foundation has been laidto eliminate the investment environment of the securities market.However, due to the insufficient relevant judicial theory and practice, that how to decideMisrepresentation, Causal Relationship and System Risk is too vague, resulting in the partiesoften not reach an agreement on these key factors, in the civil compensation cases onMisrepresentation. The judges also often feel confused on how to decide these key factors.The insufficient reasons in the verdict often caused a party concerned not satisfied, and thenappealing. Even the phenomenon of different sentences on the same or similar cases occursfrequently, thus leading to serious damage to the judicial authority.The thesis selects a case on the civil compensation for Misrepresentation, which onceraised hot discussion. The related legal problems in theory and practice involved in the focus of dispute are researched and studied. On the basis of the research, the cited case is made areasonable judgment, so as to provide some reference to the similar cases in the judicialpractice in future.The thesis is divided into four parts, besides the Reference and Conclusion.In Part One, the case, which is cited, is described, including the brief introduction of thecase and the focuses of dispute. The case on Zhan Mangda V. Huawen Media is introducedbriefly, and the focuses of dispute are refined, based on the brief introduction.In Part Two, the relevant theory and practice are researched. This part is the basis of thecase analysis. In this part, Materiality and Causation Theory of Misrepresentation are studied.In terms of Materiality, Rational Investors and Price Sensitive are researched; what’s more,Materiality in our country is summarized based on the analysis of the legislation practice ofour country. In the terms of Causation Theory, Inferred Reliance Doctrine and Fraud MarketTheory, which are belong to Causation Theory on trading, and Direct Consequence, RiskAchievement and Certain Causal association, which are belong to Causation Theory onlosses, are researched, furthermore, System Risk, which is the intervention factors of thecausation, is also studied. At the same time, the legislation of our country is analyzed.In Part Three, the case is analyzed. The two focuses of dispute of Zhan Mangda V.Huawen Media case, the information disclosure behavior of the defendant whetherconstituting Misrepresentation and if it constituting Misrepresentation, whether the causalrelationship existing between the misrepresentation and the plaintiffs’ losses, are analyzed.In Party Four, the perfection suggestions on the civil compensation system ofMisrepresentation are put forward. Based on the study of the theory and practice above,some perfection suggestions are put forward, expecting the suggestions innovated andmaking some contributions to the judiciary and legislation of our country.