Research On The Suitability Obligation Of China’s Equity Crowdfunding Platform

Equity crowdfunding is an emerging financing method in the context of Internet finance.Startups raise funds from the public through the Internet and use equity as a return on investment,which provides a new channel for solving the difficulty of startup financing,reduces corporate financing costs,and expands.The source of funding for start-ups has provided ordinary investors with the opportunity to invest in asset types that previously only risked investment funds or high net worth individuals could invest in,enriched the public’s investment choices and investment opportunities,and also encouraged innovation and entrepreneurship.Economic growth and sound multi-level capital market system.However,at the same time,investors are facing greater risks,such as the risk of crowdfunding platforms being inadequate to assume the obligation of appropriateness,moral hazard,adverse selection risk caused by information asymmetry,and the risk of failure of startups.There are legal difficulties such as unknown platform access mechanism,inaccurate positioning of platform obligations,conflicts in platform rights and responsibilities,and existence of platform self-financing behavior in the fulfillment of equity crowdfunding platform obligations.The purpose is to establish and improve relevant rules to regulate the behavior of the crowdfunding platform in order to protect the interests of investors.Equity crowdfunding platform is a financial intermediary that provides information services to both parties of investment and financing.It needs to be emphasized that it also fulfills the appropriateness obligations such as information review,risk prevention and warning,investor classification and limit,information disclosure,and investor education.Duties.However,most of the current researches on equity crowdfunding focus on its legitimacy,regulatory system,and information disclosure,and there are relatively few researches on the appropriateness of the platform for equity crowdfunding.Based on the risk characteristics of the equity crowdfunding financing market,in order to protect the interests of investors and reduce the risks and losses faced by investors,it is necessary to give play to the huge role of the appropriateness of the crowdfunding platform in equity crowdfunding.The legal perspective makes more detailed and detailed regulations on the obligations and responsibilities of crowdfunding platforms to guide practice.The essence of the platform’s appropriateness obligation is that the crowdfunding platform should sell financial products and services to investors in a targeted manner based on investors’ income,asset status,risk tolerance,and investment objectives,and match the appropriate investment products to the appropriate ones.investor.The appropriateness obligations that the crowdfunding platform needs to fulfill specifically include understanding investors,grading different investors according to the results of investor information review,fulfilling investment limits based on risk tolerance,information disclosure layering standards,and strengthening investor education in ideas.And other obligations.Among them,there are two types of investor classification standards,which are divided into "objective standards" and "combination of subjective and objective standards".Under the "objective criteria",investors ’risk tolerance is measured by a combination of net assets and annual income levels,supplemented by investors’ past investment experience as a reference.In addition to reviewing investors from objective financial data indicators,the “subjective and objective standard combination” model is also included in the investor’s subjective level.For example,sufficient financial and financial knowledge structure,true willingness to take risks,and so on.The advantage of the objective standard is that it is highly operable to classify investors.As long as investors provide relevant supporting documents,they can make a certain degree of judgment and conclusion on their risk tolerance.At the same time,this standard also has Its shortcomings are slightly sloppy.It is suggested that China’s regulatory authorities should learn from the British experience and adopt subjective and objective standards when innovating the investor grading system.The cooperation and establishment of subjective standards are also essential.Based on the results of theoretical research at home and abroad,combined with the traditional appropriateness theory,this paper analyzes the shortcomings of applying it to the field of equity crowdfunding,and makes the content of the appropriateness obligations of the equity crowdfunding platform in China based on the theory of trust protection.Further research.The author believes that this research is reasonable and has great significance for implementing the investor protection concept.