Research On Possibility Of Introducing Class Action Into Security Group Action In China

Compared to other civil fraud case, it is typical that securities fraud case usually concerns "large amount of persons but small amount of compensation". As victims, small investors cannot protect their rights by the way of representative action system. The reasons are as follows:firstly, the opt-in process leads to inefficient litigation. Secondly, representative-chosen procedure brings about the difficult creation of this litigation. Finally, the limited rights of representative make the litigation perform the function badly. It is proved that representative action has hardly been put into operation for several decades.How to protect rights of investors is a big problem. Now, class action in America has been focused on for several years, and it is suggested that class action can be introduced to our securities group litigation. Three main ideas are as follows:(1) representative action remains unchanged. (2) Representative action is superseded by class action. (3) Representative action is modified partially, taking class action as a reference.Then, is it possible that class action would be introduced into our securities group action? Obviously, there are conflictions between the representative action and class action, which is an obstacle to introduction of class action? The conflictions include: (1) ones between the two sets of system, such as Pre-procedure, Notification system, the burden of litigation costs, scope of case, the method of the party joining suit, the method of selecting representative, effect of judgments, so on. (2) One between the litigation cultures. The core of China's culture tends to no dispute, while the American seeks for litigiousness. Although these conflicts can not be removed, it shows that representative action system is full of shortcomings and imperatively modified.More important, class action and representative action has the common value: protection of rights, which is the base of introduction. As for protection of substantive rights, security's laws both in US and in China has the common aims:protecting right to information and right to fair deals. As for protection of procedural rights, although the implied right of appeal is stipulated in the US, the party's litigious rights are still taken seriously in China.How is class action introduced into securities group action in China? Firstly, the common sense must be achieved, which are both protection of rights and punishment of fraud. Secondly, the tactics of introduction is to be introduced step by step. It means that the representative action system will be partially modified or improvement according to the present situation and the difficulty level. Although the final result of introduction may be accorded with the supersessionism or the reference view, the dilemma of our securities group action would have been solved if new securities group action can protect small investors.