The Legal Structure And Application Of The Due Diligence Clause Of Securities Intermediaries

Securities intermediary agencies play an important and unique role in China’s capital market.Under the "gatekeeper" theory,in order to fulfill their duties and responsibilities,intermediary agencies should be diligent and responsible,in order to better fulfill the powers entrusted to them by regulatory agencies.This article first explores the legislative purpose of the diligent and responsible clause from the perspective of legislators.It should be said that the purpose of setting up diligent and responsible clauses is to allocate legal responsibilities,legal risks,and rights and obligations.So,when this provision is applied to practice,it should also be considered from the above three dimensions,seeking a balance between legal responsibility,legal risk,and rights and obligations,which is the true legislative purpose of legislators.From a legal perspective,the diligent and responsible clause,as a complete legal normative clause,should have its inclusion requirements.This article continues to systematically deconstruct the four constituent elements of the diligent and responsible clause,including the main requirements,legal and regulatory system,previous standards of due diligence,and legal responsibility assumption.It analyzes each constituent element of the diligent and responsible clause to enhance readers’ systematic understanding of the clause.However,the life of law lies in experience,not in logic.The diligent and responsible clause will ultimately be applied to practice,can it really work? Can it promote the improvement of regulatory efficiency? Is it conducive to the healthy development of China’s capital market? Some of the issues raised require practical testing and evaluation.Cases of administrative penalties for failure to fulfill due diligence and responsibility in the securities market can often reflect "clues" and to some extent represent the direction of punishment by regulatory agencies.Studying typical cases has certain reference and reflection significance.A typical case of the securities issuance market-Le TV’s non-public offering false statements case,which is a typical case of being punished by regulatory authorities for intermediary agencies’ failure to fulfill their duties diligently.For nearly a decade from 2006 to2015,Le TV fabricated financial data such as revenue and profits through covert means.However,in the recommendation letter for non-public issuance of stocks,the sponsor still expresses an opinion that the information disclosed by the issuer is true and complete.The false statements made by Le Eco were eventually exposed,and after years of investigation,the issuer and intermediary agencies involved were punished.The issues reflected behind this are worth pondering.Firstly,the ’gatekeeper’ theory may not be the best theory,as it has fundamental flaws and shortcomings.Secondly,from the perspective of the application effect of the diligent and responsible clause,the exemption standards under this clause are not clear,and the division of responsibilities between various intermediary agencies is also unclear,which is not conducive to the division of responsibilities.Finally,from the perspective of penalties imposed by regulatory agencies,the long regulatory cycle is not conducive to the cultivation of "self-generated" strength by issuers.The above three points are all issues that arise when the diligent and responsible clause is applied in practice.To prevent the issue from being a "case by case",this article conducts research by searching for administrative penalty cases,identifies the existing typological problems,and provides data support.There is a gap between the legislative objectives and actual application effects of legislators,and the existing problems should be analyzed.Based on the existing application difficulties and difficulties,this article provides corresponding optimization suggestions,in order to provide constructive suggestions for the implementation of the comprehensive "registration system" for stock issuance and listing.At the same time,provide theoretical guidance for securities practical experts and scholars.The arrival of the "registration system" will undoubtedly bring a new atmosphere to China’s capital market.During this period,securities intermediary institutions will be "responsible" and "diligent" to jointly promote the healthy development of the capital market,and a more stable and legal Chinese characteristic capital market will be built!...