Research On The Litigation System Of Securities Special Representative

In recent years,with the rapid development of China’s capital market,China’s securities market has also faced more problems and challenges.In order to seek more benefits,many listed companies have resorted to financial fraud,false statements,and other ways to collect money,resulting in an endless number of phenomena of damage to the rights and interests of small and medium-sized investors in the securities industry.Small and medium-sized investors often have the characteristics of a large number,a wide range,and a small share.Therefore,how to protect the rights and interests of small and medium-sized investors has become the focus of research in the current securities market.The newly revised “Securities Law” in 2019 has made China’s long-dormant representative litigation system shine again.This system can improve litigation efficiency,help investors reduce the cost of safeguarding rights,and smooth the tension between a large amount of judicial demand and limited judicial resources.The system takes “implicit participation,explicit withdrawal” as the participation mode,and helps investors achieve rights protection with the simplest method and the lowest judicial cost,achieving the effect of deterring illegal acts.In April 2021,the Guangzhou Intermediate Court heard the “First Case of China Securities Special Representative Litigation”-Kangmei Pharmaceutical Case,which provided new ideas for the revision of relevant laws and judicial interpretations through the implementation of the special representative system in judicial practice.This article will explore possible loopholes by studying the development of the special representative litigation system in judicial practice,combining existing rules,such as the issue of conflict of interest between insurance institutions as representatives and social lawyers,and how to determine the scope of plaintiffs in representative litigation.In the future,the special representative litigation system will definitely become a standardized method of dispute resolution in the securities market.Through continuous improvement of this system,it will contribute to the stable development of the securities market.The article is divided into four chapters:The first chapter mainly outlines the first case of the special representative lawsuit in China-the Kangmei Pharmaceutical case.The first section will provide a brief background description of the Kangmei Pharmaceutical case,review the entire referee process,and describe the exemplary effect it has established.The second section analyzes the enlightenment brought to us after the end of the Kangmei Pharmaceutical case.With the end of the Kangmei Pharmaceutical case,China’s corresponding judicial interpretations have also been adjusted,breaking the previous provisions on administrative pre procedures in securities disputes,no longer using relevant administrative penalties or criminal judgment documents as the necessary conditions for pre acceptance of the case,and making modifications to the determination of the “disclosure date” in important periods.The third section is our reflections on the issues presented during the trial of the Kangmei Pharmaceutical case.How to reasonably determine the scope of the plaintiff,how to alleviate the conflict of interest between the insurance institution and the social lawyer under the progressive relationship,and whether to use the Kangmei Pharmaceutical case as the selection criteria for future special representative litigation are all practical issues that arise during the trial process of Kangmei Pharmaceutical,and we need to consider and answer them one by one.The second chapter is an analysis of the dilemma in the application of the theory of the special representative litigation system.It is mainly divided into two parts,namely,the problems existing at the subject level and the procedural level in the special representative litigation system.The first section analyzes the problems existing in the main body of the special representative litigation system,mainly including the “small number” of insurance institutions and the lack of incentive and supervision mechanisms due to the public welfare nature,which make them in a monopoly position without competitive pressure and do not actively perform their duties;The second section analyzes the procedural problems in the special representative litigation system,mainly including the “difficulty in initiating cases” of insurance institutions,the lack of corresponding diversified dispute resolution mechanisms,and the broad selection provisions of insurance institutions.The third chapter proposes suggestions for improving the special representative litigation system at the level of litigation subjects.The first section proposes to introduce multiple entities to expand the scale of insurance institutions,and establish corresponding competition mechanisms to ensure benign competition;The second section proposes the establishment of an incentive mechanism and supervision mechanism for insurance institutions.In the face of the lack of incentive mechanisms for insurance institutions,it advocates expanding the scale of funds for insurance institutions,implementing a multi entity sharing fund guarantee system,ensuring sufficient internal funds,and thus motivating staff.In response to the issue of conflict of interest between insurance institutions and social lawyers,it proposes that under the premise of encouraging insurance institutions,Further build a system of dislocation competition and cooperation between insurance institutions and social lawyers.In the face of the lack of supervision mechanism for insurance institutions,it is advocated to establish a multi-party supervision system,including the people’s courts,people’s procuratorates,investors,and securities regulatory agencies.The fourth chapter puts forward suggestions for improving the problems of the special representative litigation system at the procedural level.The first section proposes to actively promote the initiation of ordinary representative litigation by encouraging lawyers and courts on the basis of improving ordinary representative litigation;The second section proposes to further refine and improve the special representative litigation procedures.In the face of the issue of how to reasonably determine the scope of the plaintiff raised in the Kangmei Pharmaceutical case,it proposes a new idea for insurance institutions to intervene in the representative litigation in advance;In the face of how to specify the selection criteria for insurance institutions,it is proposed to follow the principle of maximizing cost effectiveness and consider various factors before comprehensive selection;In the face of the current problem of a small number of insurance institutions and a single dispute resolution method,a parallel strategy to promote multiple dispute resolution mechanisms is proposed.