Legal Regulation Of Stock Market "black Mouth" In China’s Securities Investment Consulting Industry

The production and development of China’s securities investment consultingindustry is along with the continuous development of the securities market. On theconstruction of securities market of China, the securities investment consultingindustry has played a positive role in promoting. Not only securities investmentconsulting institutions can help investors to reduce blindness, and guide rationalinvestment, but also can improve the quality of information, enhance the marketallocation of resources, improve the efficiency and transparency of market. Therefore,it is the important intermediary organization of capital market. Whether comparedwith the foreign mature securities investment consulting industry, or the healthydeveloping requirements of securities market in China, there are still some problemsto be solved in China’s securities investment consulting industry due to developmentfor a short time. Among them, the most concerned is the "Black Mouth" in stockmarket. These "Black Mouths" in stock market who not only defraud the investors’money and seriously damage to investors especially ordinary investors’ interests, havea tremendous negative impact on the credibility and reputation of China’s securitiesinvestment consulting industry, but also affect the effectiveness of the stock marketpricing mechanism, shake the basis of integrity of the securities market, disrupt thenormal management of China’s securities market order, and have become a majorobstacle to stable development of China’s securities market. Therefore, we shouldcrack down on the "Black Mouth" in stock market without delay.In recent years, in order to combat the "Black Mouth" in stock market, relevantdepartments have mobilized a large number of human and material resources. Butthere has little effect, which the "Black Mouth" in stock market is stronger instead ofdisappeared, and even combines with the media. The reason is mainly due to hugeprofits, lack of professional ethics, low illegal cost but high cost of rights protection,dependence and blinding obedience of ordinary investors. The relevant departments in China issued a series of laws, regulations,departmental rules and policies to regulation and crack down on the "Black Mouth" instock market. The regulation to China’s securities investment consulting industryinvolves market access, information disclosure, practicing evasive, prohibited acts,responsibility, and so on. However, according to the present situation, the currentlaws and regulations can not solve this problem of "Black Mouth" in stock market.The main reason is legal documents ranking low, messy content and unsystematic,liability provisions imperfect.Therefore, the main purpose of this paper is to point out the deficiencies ofcurrent law in the regulation to the "Black Mouth" in stock market through theanalysis of the characteristics, dangers, present situation and the causes of the "BlackMouth" in stock market, in order to find a solution strategy. In the paper, thetheoretical analysis, empirical analysis and comparative analysis are using. On thebasis of learning of legislative experiences from the United States, Japan and othercountries, and considering China’s national conditions, the author proposes thefollowing four recommendations to perfect the legal regulation of the "Black Mouth”in stock market in China.First, it should improve the relevant legal. To specifically regulate China’ssecurities investment consulting industry, we can consider development of ahigh-range law, which is named Securities Investment Consulting Regulatory Law. Inthe law, we should expand the scope of securities investment consulting industry,establish and improve various supporting systems, improve the relevant system ofcivil liability.Secondly, we should create a standardized securities investment consultingindustry regulatory system, then we may consider establish a specialized institutionsto regulate the securities investment consulting industry. The securities regulatoryauthorities must strengthen collaboration with other departments to work together.The industry self-regulatory organization for securities investment consultingindustry should be established. In addition, we should strengthen the regulation of theMedias in order to specificate the information spread of securities investmentconsulting. Third, we should improve the quality of the securities investment consultingstaff by enhancing the market access. It is necessary to attach importance to thecultivation of professional knowledge and improvement of professional ethics. Thereare three points, to develop the required knowledge system for the securitiesinvestment consulting staff, to reform of China’s existing securities qualificationexamination system, to strengthen the latter re-training for securities consulting staff.Finally, we also should strengthen the education of investor for securitiesprofessional knowledge and avoiding investment risk. The relevant departments canencourage investors to learn some basics knowledge of securities invest, guideinvestors to develop the right financial management concepts, recognize the nature,role and limitations of the securities investment consulting. Only in this way, thelegitimate rights and interests of ordinary investors are able to better safeguard.