Securities Untrue Statement Of Civil Liability Study

The fact that different participants of the securities exchange market have different capabilities to acquire the information on the securities creates a moral hazard, i.e. the incentive for the participants with convenience to acquire information to do harm to the interests of others participants. To establish a civil liability system is the necessity to decrease the potential for moral hazard and secure the investors. To the fullest extent, the misrepresentation refers to the behavior violating the obligation of the disclosure, yet only the misrepresentation with materiality results in the loss the investors.The civil liability of misrepresentation can be understood both from the angle of tort law and contract law. The investors should have the right to choose an angle to claim damages.The elements of the tort liability are composed of the misrepresentation, the subjective fault, the loss of the investor and the causality between the misrepresentation and the loss. It should determine the misrepresentation according to the criteria of the materiality. Different subjective fault criteria should apply to different person responsible to compensate the loss of the investor. The burden to prove the existence of the loss should be assumed by the plaintiff. The causality between the misrepresentation and the loss should be proved through the prove of two sub-causalities, i.e. the causality between the misrepresentation and the securities exchange of the investor and the causality between the misrepresentation and the loss of the investor.The remedy for the misrepresentation from the angle of the contract law includes the rescission of the contract and the recover of the loss, and the loss is composed of the direct loss and the interests of the direct loss. The remedy for the misrepresentation in accordance with the tort law is only the damages, and the measure in common use to calculate the loss is the out-of-pocket measure.