Research Of Credit Rating Agency's Liability

Credit rating agency is the professional intermediary service organization which is generating as the development of capital market. In the market, credit rating agency works as the "gatekeeper", it builds a information bridge between the investors and the financing men, and in some ways, it leads the investors'investment direction. A sophisticated credit rating system takes an important part in the development of capital market; it can eliminate the information asymmetry, reduce the risk of investment, and depress the corporation's transaction cost. Also, it plays as an important mean for the market supervision. To ensure that credit rating agency can play the function better, it is significant to study its civil liability.Credit rating agency has an independent position in the market. As some other intermediary service organizations, it provides information for securities market specially, plays as an expert which is authenticated and supervised by government department. While differing from other intermediary service organizations, credit rating agency has its particularity, we should attention to both the similarity and the particularity.There are two viewpoints about the nature of credit rating agency's civil liability, which are liability for breach of contract and tort liability. Considering its properties, using the view of tort liability can protect the investors'interest better, accord with the requirement of civil liability's integration more, and keep the order of the market. The view also conform the international trends.Doctrine of liability fixation is the basic maxim of civil liability's identification. Compare with no-fault liability and equitable liability, it can both protect the investors'interest and pioneer enough space for credit rating agency's development. This doctrine of liability fixation could play active role in prevention and education, maintain the legal system of moderate flexibility and rationality, conforming trends of civil liability in the securities law regime.The difficulty of confirming credit rating agency's civil liability is identify whether it has faults and whether there are causal connections between credit rating agency's prejudicial acts and victims'damage. The key is the confirmation of whether the agency due diligence. According to the standard of objective theory, if the agency can publish the information independently, objectively, credibly and publicly during it works, it could be identified to be no fault, otherwise the agency should shoulder the responsibility. The causality is consisted of presumptive causality theory and legal causality theory. While determine the legal causality, we need to examine if there are intermediaries and whether the intermediaries affect investors'determinations.Besides clients, the third party who suffered losses for trusting rating reports' authenticity, integrity and accuracy to Securities and Exchange also litigate as a request owner for tort damages. The third party should meet three requirements below: first, they do invest for trust rating reports; second, they shouldn't know the flaws in the reports when they exchange; third, they suffer loss. The subject of compensation should be limited to be the agency, not include its staffs. The damage can be distributed fairly only if the civil damages liability of the credit rating agencies are compensatory damages. The range of compensation covers such areas include the commission and stamp tax paid for the investment margin loss, investment margin loss, and interest loss for capital occupation.