Research On The Criteria For Determining Materiality Of The Misrepresentation In China’s Securities Market

For a long time,both theoretical research and judicial practice have been arguing about materiality.The complexity of views often lead to confusion in application.《Several Provisions of the Supreme People’s Court on the Trial of Civil Cases for Damages for the Tort of Misrepresentation in the Securities Market》have been abolished the procedural prerequisite and redefined materiality.However,the new judicial interpretation still can not provide a clear identification on the trial of cases for the tort of misrepresentation.In fact,the issue of materiality is a systemic problem,which manifests the principles of order,fairness and efficiency in economic law.The improvement of materiality determination should start with the sorting of concepts,analyzing the connotation and extension of concepts,clarifying the links and differences between criterion,and exploring appropriate judgment modes.This paper is divided into four chapters,focusing on the criteria for determining materiality of misrepresentation.The first chapter is the social value of materiality of misrepresentation.The legislative purpose of the Securities Law reflects the social standard value.As an important system of the Securities Law,materiality plays an active role in market supervision,securities activities and investor protection.The second chapter is the theoretical basis for materiality of securities misrepresentation.This chapter analyzes the meaning of materiality from the perspectives of civil tort liability and the influence of the cancellation of the prior procedure on materiality.The tort liability of misrepresentation is a special civil tort liability.Materiality belongs to the behavioral elements,and is independent of causation and loss.After the cancellation of the prior procedure,the securities misrepresentation behavior which subjected to administrative punishment may not have materiality,and the people’s court still needs to make an independent judgment.The third chapter is the criteria for determining materiality of securities misrepresentation.First of all,it summarizes the criteria of developed securities markets aboard,and understands the legal logic.Foreign markets can be divided into two criterion: investor decision and price sensitive,in which the investor decision criteria extend the concepts of "rational investor" and "possibility/influence degree".Secondly,it combs the criteria for determining materiality.Before the introduction of the new judicial interpretation,our country applies the investor decision criteria in the securities issuance stage,while the price sensitive criteria is used in the securities trading stage.The new judicial interpretation put to use the judgment standard of conspicuous changes in the trading price or volume of the securities,which turn into the monism of price sensitive criteria.The fourth chapter is the suggestions for the improvement of the criteria for determining materiality of securities misrepresentation in China.Although the price sensitive criteria is objective and operable,the single application of the criteria must have some limitations.It should take a logic of investor decision criteria as the main and price sensitive criteria as the auxiliary.The provision of a material event is relatively abstract in China’s current legal norms,which can be optimized from quality and quantity.At the same time,it is necessary to go further to explain conspicuous changes in rule of the price sensitive criteria,including defining the zero date,change range,price range and other factors,so as to make it more applicable.