The Scope Of Compensation System For Damage Of Misrepresentation In Securities

Despite co-evolution of systems for misrepresentation and open information system, it has already formed a relatively complete system in theory, substantive law and procedural rules at the United States, which has been the imitating model in the world. However, it has no standard to confirm the scope of damage compensation for misrepresentation of securities. Although there are series of methods of direct loss method, which is one of the main methods in judicial experience, we should devote us more to confirm the scope of damage compensation for misrepresentation of securities. Due to the judicial tradition in China "Treasuring criminal law, despising civil law" and the shortage of operability of relative securities law and regulations, it is so difficult to confirm the scope of damage compensation for misrepresentation of securities in legal practice.Based on this, the paper, from the theory of compensation system for damage of misrepresentation of securities, completely explores the four core elements of confirming the scope of damage compensation for misrepresentation of securities. The paper researches beneficially the scope of damage compensation for misrepresentation of securities in order to put forward to reasonable suggestions. This total is divided into five parts:The first part is "the Theoretical Basis of Compensation System for Damage of Misrepresentation of Securities". It includes two levels:the first level is the basic foundation, and the second level is the damage compensation for misrepresentation of securities, which demonstrate theoretical premise of confirming the scope of damage compensation for misrepresentation of securities. First, the rules of act for tort tend to be more applicable than the rules of contract law in the confirming the scope of damage compensation for misrepresentation of securities. Second, we should be based on China's national conditions, and cannot completely accept the U.S. effective capital markets hypothesis and the theory of reference for fraud, because we has weak effective market at present. Third, the confirming the scope of damage compensation for misrepresentation of securities, should seriously follow the principles of statutory duty, compensatory principle and the principle of actual loss.The second part is "Confirming Standard of Misrepresentation". The paper points out there is no substantial difference between criteria of investor's decision-making and influencing security price, through assessing our confirming stand for scope of misrepresentation in China and leaning from the American relative rules. Meanwhile, it suggests that we should broaden the confirming standard of the scope of misrepresentation, share two standards and unify them under the concept of "Important Information".The third part is "the Qualifying Principal of Damage Compensation for Misrepresentation of Securities". The paper definite the qualifying principal of damage compensation through defining the prerequisite for confirming qualifying principal for misrepresentation of securities, period of existence for the scope of the qualifying principal and limited conditions of the qualifying principal.The fourth part is "the Scope of Liable Principal of Damage Compensation for Misrepresentation of Securities". The paper defines the extension of liable principal of damage compensation of the false statement of securities through analyzing every reasons of liable principal.The fifth part is "Calculation of the Scope of Damage Compensation for Misrepresentation of Securities". The chapter analyzes the existing Provisions & shortage of calculation of the scope of damage compensation, reviews relative rules of Securities Law of USA, and finally points out that calculation methods of damage compensation for misrepresentation of securities should focus on the situation of securities market and the loss of investors, seriously obey the basic principle of damage compensation of securities, distinguish different stages of actions of misrepresentation and ensure different behavioral patterns of misrepresentation. Then, it puts forward to weighted average PE method for "You Kong" damages arising from false statements.