Research On Depository Receipts Fraud And Remedies

Depository Receipts are securities issued by the depositary and issued in China on the basis of foreign securities,representing the interests of foreign underlying securities.Depository Receipts Fraud refers to the acts of foreign issuers or depositaries in the issuance,trading and related activities of depository receipts,such as luring investors to buy and sell securities and other acts against the true will of customers and damaging their interests.In the process of gradual opening of China’s capital market to the outside world,depositary receipts provide a convenient way for China’s overseas listed enterprises to return to China’s domestic market.2019 new Securities Law officially includes depositary receipts into the scope of securities,while depositary receipts are a new type of securities in China,and there are still shortcomings in the relevant system regulation introduced at present.This paper focuses on the remedy of depositary receipt fraud,analyzes the elements of depositary receipt fraud,clarifies the types of depositary receipt fraud,and further studies the possible difficulties of depositary receipt fraud in China based on this,and proposes suggestions for optimization.The paper contains three parts:introduction,main text,and conclusion,including four chapters.The first chapter focuses on the special features of the legal relationship structure of depositary receipts,starting from the concept and operation mechanism of depositary receipts,because there is no unified definition of the concept of depositary receipts in the academic field,this paper takes the definition of depositary receipts in the Administrative Regulations as the basis and combines the views of other scholars to make a clear definition of depositary receipts,the object of this paper.Therefore,this paper elaborates on the operation mechanism of depositary receipts,classifies depositary receipts,and introduces the grading system of U.S.depositary receipts to lay the foundation for the subsequent comparison between U.S.and Chinese depositary receipts.Based on the above basic concepts,we further analyze the special features of the structure of depositary receipts,mainly the complex tripartite legal relationship and the inevitable cross-border nature.The second chapter is a detailed and in-depth analysis of the depositary receipt fraud,firstly,the civil elements of depositary receipt fraud are analyzed,including subjective elements,subjective elements,causal elements,behavioral elements and objective elements,and the differences in the regulation of the above elements in depositary receipt fraud in the United States are compared one by one.The criteria for allocating civil liability for depository receipt fraud are explained.Second,because the most common form of depository receipt fraud is misrepresentation,this paper focuses on the disclosure regime for depository receipt fraud.This chapter compares the regulatory regimes in China and the United States,which are the basis for both civil lawsuits brought by investors in depository receipts after fraud and administrative sanctions imposed by the SEC in terms of administrative remedies.At the same time,the civil remedies available to investors in depositary receipts in the event of fraud are also proposed.The third chapter analyzes the current problems in the remedy of depositary receipt fraud.The first is the problem of regulation in administrative remedies,the lack of depositary obligations and the overlap of cross-border regulation of depositary receipts in China’s current disclosure regulation.Secondly,the problems of civil remedies for investors in depositary receipt fraud are studied,starting from the current representative actions in the civil remedies in the securities field,and the shortcomings of ordinary representative actions and special representative actions are analyzed respectively.Again,the issues of jurisdiction and application of law are raised for cross-border litigation of depositary receipt fraud.The fourth chapter is to propose improvement proposals respectively for the issues raised in Chapter 3.Firstly,in response to the regulatory issues,this paper,after research,believes that the information disclosure system should be improved,the information disclosure obligations of the depositary should be determined,the differentiated information disclosure standards should be refined,and the signing of bilateral MOUs and mutual legal assistance agreements related to depositary receipts should be promoted in order to achieve the optimization of the remedies for depositary receipts fraud.Second,for civil remedy methods,the improvement path is proposed,suggesting the criteria for case selection by specific insured institutions,the parallel initiation of the special representative system,the elimination of the pre-procedure of case selection by the investment service center,and the establishment of a multi-party supervision system for insured institutions.Again,for the jurisdiction and application of law,it is suggested that the jurisdiction and application of law for depositary receipt fraud should be clarified and improved with reference to the transaction principle and purpose principle in the United States.