Civil Liability Of Certified Public Accountants Toward The Third Party In The Information Disclosure Of Securities

Information disclosure system is the core content of the Securities Law, whice play a very important role in the protection of the interests of investors and safeguard the securities market order. Therefore, all countries have established disclosure information systems in securities law ,whice require the one disclosing the deceitful information to bear the corresponding responsibilities, including Chinese Securities Law. In the investigation to civil liability of false information disclosure's, speaking of responsible party's scope, it not only included the company, also included some facilitating agencies who participated in manufacturing the information. A Certified Public Accountant(CPA) known as "economic police" are composed of Accounting Firms who are also included in these. CPA are functioning as the most important gate-keepers in the process of assuring the quality of information disclosure . The financial audit reports issued by them are treated as the integral part of the information disclosed ,whice increase the credibility of the disclosure of the information among society, at the same time whice play a direct impact on the investment decisions of investors. Chinese securities market are being at an early stage of development, some system is not sound. In recent years, there have been numerous deceitful information in the process of information disclosure ,whice caused the large number of heavy losses of investors third person and severe hurted their enthusiasm for investing and also disturbed the normal market order. In order to attack the false phenomenon in the information disclosure of the stock market and protect the legitimate rights and interests of investors, Chinese "Securities Act" in 2005 was amended on the disclosure of deceiful information to civil liability for a relatively detailed provisions. Civil liability of CPA to investors, not only provides the attribution of responsibility principle but also gives procedures on the burden of proof, which is a larger improvement than previously. However, compared with developed countries in the relevant provisions of the law ,it remains inadequate and the lack of operable. The civil liability of CPA are related to the protection of the interests of the victims, and also about the healthy development of stock market , because CPA is special role in the professional field and the speicfic civil subject. Therefore, the study on the civil liability of CPA towards the third party enjoy great theoretical and practical significance in the information disclosure of Securities. The essay is the study on the civil liability of CPA towards the third party in the information disclosure of Securities.The essay can be divided into four sections. By carefully reading the present "Securities law" and "Some Provisions of the Supreme People's Court on Trying Cases of Civil Compensation Arising from False Statement in Securities Market"and taking into account of "The Several Provisions of the Supreme People's Court on the Trial of Compensation Cases for Civil Tort Involving Accounting Firms Engaging in the Audit Business"adopted in the June 15, 2007, and the typical national and regional information disclosure in the securities registered accountants .Chapter 1 focused on the nature of the civil liability of CPA to the third. There is academic disputes among a contractual obligation theory and the responsibility theory .Contract responsibility comes mainly from Germany, whereas the contractual obligation theory from common law countries. the Civil liability of CPA to the third is the tort liability,whice supported by six considerations, including Chinese contract law,the full protection of the legitimate interests of the third,the fact of fair,the judicial practice,the legal system's unification and the latest trends in international developmentets.After recognizing civil liability of CPA to the third,whice is the tort liability.we should study the elements of tort liability. But the question is that the elements of tort liability in civil law, whice aren't applied to the civil liability of CPA to the third. Chapter 2 focused on elements of tort liability.The CPA's offence will be defined as the four forms ,whice included false records,misleading statements,major omissions and no timely report.In the securities market, not only all illegal activities of CPA must be held liabiltiy for violations, but also the only " significant " violations will be sactioned by the law .What is "significant" ? Granted the United States Securities Act,the paper reviewed "significant" in Chinese securities law.we hold "significant" standard ,whice is "investor decision-making" standard in Chinese securities law. On the facts of damage, the article discussed the nature and scope of the damage . The nature of damage belongs to pure economic losses. The Scope of facts of damage will be divided into the harm in the distribution market and the the damage in trading market.Among the indirect losses , the essay hold that the scope of indirect losses was too narrow and should include litigation costs and legal fees. In the causal relationship, with two-way method ,it is divided into the fact's causation and legal causation.Fact's causation are established to prove the fact that the relationshipexist betweenthe false statement and investor decision-making,on basis of the existence of the trust relationship and "market fraud theory" under the presumption of trust. The essence of the legal causal relationship is in reasonable limitation of the scope of CPA's compensation to avoid causal relationship between the unlimited extension of the chain, or other factors intervene result of the registered accountants to unreasonable liability. The standard are advocated by the "reasonably foreseeable" and the "direct result ". In the legal causal relationship between the allocation of the burden of proof, the article maintains that the burden of proof responsibility on the buyer of the securities only need to prove the unfair price to trade as result from CPA's false statements . In respect of the fault, the principle of registered accountants'Tort liability on the third person and the fault determination are involved on the principle of attribution respongsibility ,by anlysis of the disputes between the accounting profession and the legal profession,the essay contend that the tort's liability of the CPA to the third should be the principle of the fault of responsibility. the final analysis is determinedis by the legal status of practice guidelines of CPA, This article holds that the CPA's practice guidelines are the basis of his or her fault.After studying on the elements of tort liability,we should slove the scope of the plaintiff in the in suit . Chapter 3 focused on the scope of the third person . First ,the paper reference to the scope of the third in the securities laws of relevant countries and regions, then studying on the scope of the third in Chinese securities law. The third person mainly include seller and purchaser of outstanding securities , pledgee or mortgage of the concerned securities in Chinese securities law.The final chapter mainly study commitment to civil liability of the CPA.Paper analysis the subject of responsibility , the manner to bear responsibility and acquittance of responsibility . Thus it assumes that the accounting firms are subject of responsibility. Responsible approach including a deliberate attempt (including gross negligence) for the jointly and severally liable, and negligence for the shared responsibility. Excusing responsibility includes no fault of CPA, the fault of the third and no causal relationship among loss and false statements.In this paper, I conducted a superficial study on civil liability of CPA toward the third party in the information disclosure of Securities and put forward some improving suggestion on the "Securities Law" and other relevant requirements .As my knowledge and capacity are limited, there are many shortage, but I will further my study in the future.