Enlightment Of Beijing Shoufang Case: Legal Regime In The Supervision Of Securities Investment Consultation Industry

In October 2008 Jianzhong Wang, the legal representative of Beijing Shoufang investment consultation limited corporation was confiscated 125 million yuan from illegal income and fined 125 million yuan because of his illegal behavior in security market. China's Securities Regulatory Commission(CSRC) has adopted measures to prohibit him entering the securities market forever and repealed Beijing Shoufang's capacity in supplying investment advisory, and has transferred the case to public security organs to investigate his criminal indeeds. Jianzhong Wang became the first suspect in manipulating the market that be transfered to the justice system, and it stunned the capital market greatly.Under such circumstances, this paper combines the characteristics of our country and the development condition of our securities market, discussing the regulatory system of our existing securities investment consulting agencies and their employees, on this basis, the corresponding countermeasure be proposed improving the securities investment consulting agencies and their employees in the legal system and regulatory regime as soon as possible, to create a fair and transparent capital market environment for small and medium investors. The paper is divided into 3 parts:The first part: the background of this case. This part summarized the whole case, and concealed the social problem behind it, the paper explored the case from a legal point of view on the basis of the subject.The second part: a legal analysis upon the case. The case is analyzed from three aspects. The first, the suspicion that Shoufang and Jianzhong Wang manipulating market. In our law system , there are many relevant provisions in the field of market manipulation. Jianzhong Wang's behavior of dealing between his actual accounts had affected the price and volume of the security, and such acts constituted a market manipulation. Second, administration authority did not pay enough attention to the functions of the major regulators, and kept low efficiency in supervising securities investment agencies'illegal conducts. the reason of the inefficiency of administrative supervision is that CSRC be mainly focused on listed companies and securities agencies, resulting in hysiteresis in investigating the case and weak penalty for illegal behavior . The third, the securities investment consultation insititution and personnel market access mechanism is not perfect, the former is generally small and lacks sound corporate governance structure, of which leads to many problems that insititution and staff itself can't get rid and the securities investment consulting industry management is confusing.The third part: the enlightenment of Shoufang case is that it perfected the regulations of securities investment consulting industry. Based on the analysis of the causes, the paper put forward suggestions and countermeasure to the problem to prevent such things, firstly we must perfect the relevant legislation, detail provision of its principle based on our , formulate according to the characteristics of the security investment consulting industry , and set up reasonable market access mechanism, finally we should construct responsibility systems for securities investment consulting institution and its practitioners. In addition, establishing other supporting system, which includes straighten regulators, constructing reasonable supervision system will also playing a very important role in perfecting small investor protection system.