Configuration Of Civil Liability Of Securities Service Providers In Misrepresentation

In recent years,civil compensation lawsuits for misrepresentation have increased rapidly,and the trend of increasing civil liability for securities service institutions.While promoting the construction of judicial system of securities market law enforcement and strictly combating illegal activities of securities,there may be some overkill phenomena,allowing securities service institutions to fall into the trap of "deep pockets" and break the balance of securities market ecology.In order to further promote the high-quality development of the securities market and safeguard the legitimate rights and interests of investors,it is necessary to make a good allocation of the civil liability of the securities service providers,which are repeated players in the securities market.This paper focuses on how to define whether securities service institutions,as gatekeepers of the securities market,are diligent and responsible,and how to assume their internal and external civil liability in the case of failure to be diligent and responsible.In addition to the introduction and concluding remarks,the main text is divided into four parts:The first part is a study of China’s securities service institutions and their civil liability norms.In the context of cracking down on illegal securities activities,it has become a common practice in law enforcement and judicial practice to compact the responsibility of securities service institutions,the gatekeepers of the securities market,and to urge them to perform their duties.However,the gatekeeper theory originated from the United States,compared to its independence,China’s securities service institutions are not strong,and may not be able to achieve the goal of the gatekeeper system.In addition,securities service institutions have limited inspection capacity and need to take into account efficiency,and cannot provide absolute assurance on the business,financial and compliance status of issuers and listed companies.Regarding the civil liability of securities service providers,several laws in China have made provisions from various perspectives and issued many judicial interpretations and normative documents,except for the current Securities Law which sets joint and several liability for securities service providers under the presumption of fault,most of the other norms are based on the principle of matching the liability with the tort and the degree of subjective fault,distinguishing between intentional and negligent civil liability.Joint and several liability is the experience of the courts to avoid colliding with the Securities Law.The second part is an empirical analysis of the civil liability of securities service institutions in China.In false statements,securities service institutions bear civil liability due to their failure to fulfill their duties diligently and their faults.Through the analysis of two iconic cases in the history of the securities market rule of law,namely the Kangmei Pharmaceutical case and the Wuyang Bond case,it is found that there are two problems in the current civil liability of securities service institutions in China:firstly,the standards for determining the faults of securities service institutions are still not very clear,the determination of faults by the same type of securities service institutions varies in different cases,and in addition,some securities service institutions bear imbalanced administrative and civil responsibilities based on the same faults;Secondly,the sharing of responsibilities among securities service institutions is still in an disorderly state.Although it has become a consensus that the sharing of responsibilities among securities service institutions matches the degree of infringement and subjective fault,and some joint and several liabilities frequently appear in judicial judgments,the application methods of this newly developed form of tort liability are still blank,and the sharing and recovery of responsibilities among securities service institutions is still a difficult problem in individual cases.The third part addresses issue one,which is a refinement of the criteria for determining the fault of securities service providers.This part discusses the issue of fault of securities service providers in the form of a combination of theoretical studies and case studies,mainly selected to compare the case of Dongyi v.CSRC with the U.S.Barchris case.The former case reflects the current regulatory requirements and adjudication rules,in which the sponsor,the reporting accountant and the issuer’s attorney are required to take turns to check the issuer’s financial fraud;the latter case is a classic case in the history of U.S.securities law that established the "sliding scale of responsibility" for the due diligence of all parties in an offering,and although the issuer’s attorney’s investigation is not recognized,it can still meet a reasonable standard of reliance on the audited financial statements.In addition,based on the Wuyang Bond case,the reasons for this problem were analyzed and corresponding suggestions were proposed.From a theoretical point of view,fault in modern civil law has become a "technical means to achieve various legal values in an integrated manner",which can be reflected in the field of misrepresentation to find the criteria for determining the fault of securities service providers.The fourth part addresses question two,which is a study on the configuration of civil liability of securities service institutions in China.In the case of general negligence of securities service providers,a form of partial joint and several liability has developed in civil actions for misrepresentation in China.Compared with the traditional civil law design of joint and several liability for several torts and dichotomy of contributory liability,the supplementary liability and partial joint and several liability reflect the partial allocation of the risk of inability to be compensated,which can better measure the interests of market parties;and compared with the tendency of fault and liability mismatch of supplementary liability,partial joint and several liability reflects a stronger attribute of fault and penalty equivalence and should be applied in the case of general negligence of securities service providers.Subsequently,it tries to establish corresponding rules to unify the application method of partial joint and several liability,summarizes two rules of allocation of risk liability under partial joint and several liability from the perspective of risk liability allocation,and deduces the rules of recovery under partial joint and several liability.As for the method of application of joint and several liability in the case of intentional or gross negligence of securities service providers,it is sufficient to follow the rules of civil law.