Research On The Legal System Of Advance Compensation In Securities Market

Article 93 of the securities law provides for the first time the system of compensation in advance of securities,which is an integral part of China’s multi-level investor civil compensation system and a system of investor protection in the securities market with Chinese characteristics.The establishment and improvement of the system of securities compensation in advance is the epitome of the perfection of investor protection system in China’s securities market.It is of great significance for timely and full compensation of investors’ losses,and plays an important role in compacting the securities market "gatekeeper"responsibility of sponsor institutions.The equity of the securities market is an important aspect of social equity.The stability of the financial market is related to the stable development of the whole society.Improving the system of compensation in advance of securities is helpful to cultivate a fair market environment and stabilize the financial market order.The construction of China’s securities pre payment system started with the fraud issue case of Wanfu biotechnology.In December 2015,the commitment obligation of the sponsor institutions to pay in advance was written into the standards for the content and format of information disclosure of companies offering securities to the public No.1-prospectus(hereinafter referred to as the "content and Format Criteria No.1"),and in December 2019,the system was formally written into the securities law.There are many studies on this system in the theoretical and practical circles,but there are still differences on the scope of compensation and compensation subject,compensation standard,incentive mechanism,source of funds and recovery.This research is based on the relevant research results of the academia,the analysis of the causes of the existing problems of the securities advance payment system and the advanced legislation experience outside the territory,and try to make suggestions for its improvement.The first chapter is the introduction,expounding the research background,significance,research status at home and abroad,putting forward research ideas and methods,and clarifying the research focus,difficulty,and innovation.The second chapter analyzes the concept,basic legal relationship and legitimacy of the securities advance payment system.It is clarified that securities advance payment refers to a legal system that applies to cases of fraudulent issuance and misrepresentation,where the advance payer reaches a settlement with the compensated investor before the administrative penalty and civil judgment are made,and obtains the right of recourse after the payment.The behavior of the advance payer and the compensated investor to compromise with each other and reach an agreement on the securities civil dispute is consistent with the characteristics of a civil settlement,and the two parties are in a settlement agreement relationship.Securities advance payment has advantages over civil litigation in terms of pre-procedures,cycle length,difficulty of proof,and rights protection costs.It is necessary to establish and improve the advance payment system.The value of the securities advance payment system is embodied in helping the injured investors obtain compensation,establishing channels for the advance payers to obtain administrative penalties or reducing treatment,alleviating the pressure of compensation for listed companies,and promoting the fair and stable development of the capital market.The third chapter combs and analyzes the current status of legislation and practice of the securities advance compensation system,and discusses the problems existing in the securities advance compensation system.The legal sources of the securities advance payment system include the "Securities Law","Content and Format Guidelines No.1","Opinions of the General Office of the State Council on Further Strengthening the Protection of the Legal Rights and Interests of Small and Medium Investors in the Capital Market"(hereinafter referred to as "Strengthening Investor Protection" Opinions)and other laws and regulations,the specific rules of the securities advance compensation system are still lacking.The establishment of the securities advance payment system reflects the characteristics of"practice before legislation".Representative cases of advance payment practice include the fraudulent issuance case of Wanfushengke,the fraudulent issuance case of Hailianxun,and the fraudulent issuance case of Xintai Electric.This article examines the legislative and practical disputes,and proposes that the securities advance payment system has the problem of ambiguity in the scope of compensation and compensation,lack of consistency and fairness of compensation standards,insufficient incentives for system activation,single source of compensation funds and difficulties in realizing the right of recovery.And use this as the problem orientation of this article to start research.The fourth chapter compares the American fair fund system with the relevant systems of my country’s "civil compensation priority" principle,and concludes that the American fair fund system has advantages in using administrative fines,confiscated illegal income,and administrative settlements to compensate investors for damage.The conclusion of this article suggests that my country establish a fair fund system to implement the principle of "civil compensation priority".Comparing the investor compensation fund system in Hong Kong with the insurance fund system in the Mainland,it is concluded that the investor compensation fund has superiority in protecting the rights and interests of investors.It is recommended that the Mainland reform the insurance fund system to give insurance funds the qualifications of the insurance fund to be the first payment entity and strengthen its Protect investor functions.The fifth chapter is based on the analysis of the causes of the existing problems of the advance payment system,the related research results of academia,and the advanced foreign legislation experience.This article intends to propose the following system improvement suggestions for the above problems:include the insurance fund into the payment subject,and determine the recipients with substantive standards.Reimbursement subjects;clarify payment standards and increase the recognition of payment plans,build a dedicated network platform to increase investor participation;formulate supporting industry guidelines to guide the standardization of first compensation,and formulate departmental regulations to clarify the conditions and effects of mitigating or mitigating administrative penalties;The "incomplete"payment method encourages multi-parties to pay jointly,and establishes a fair fund to protect the right of recourse for the first payer.In the design of the securities advance payment system,the advance payer actively contributed capital to compensate investors for losses,and assumed a huge recovery risk.The essence of this system design is that legislators have made the choice of weakening the legal rights of the indemnifier and preferentially protecting the rights and interests of investors and the order of the capital market when weighing the economic benefits of the first payer,the compensation of investor losses and the order of the capital market.This research is based on the position of balancing the interests of all parties as much as possible,trying to explore a path to improve the securities advance payment system.