Our Country Law Credit Rating Agencies To Bond Investors Build Of Civil Liability

The civil liability of credit rating agencies poses a fresh problem to thedeveloping credit rating industry in China. Developments in all aspects ofthe credit rating industry in China lag behind that in the United States andother developed countries, and the whole society has no faith in the ratingresult and would better not apply such result, moreover few bond investorswould bring actions on the ground of improper rating results in order tomake credit rating agencies assume civil liability.However, as aforward-looking discussion,the research on the civil liability of credit ratingagencies to bond investors has important theoretical and practicalsignificance. First of all, appropriate guidance through legal methods iscrucial for a young and growing industry.In fact the subject who claims forcivil liability is players in the market rather than public authorities.Therefore,governance through the way of imposing civil liability to creditrating industry is more conducive to identify the boundary of the right, tomake the best of market forces,and to shrink the space for intervention bypublic authorities.Speaking from this perspective, such governance accordswith the law concept of "small government, big society". In addition, asforeign credit rating agencies has begun to enter into China in recent years,the twofold pressures of the inherent defects and external competition facedby domestic rating agencies ask for systematic research on this area inadvance,which will benefits domestic credit rating industry by way ofstrengthening their own capacity as soon as possible, setting up standardsof practice in this industry, and rasing competitiveness at the internationallevel. Along with the train of thought of rasing the issue, analysing andaddressing problems, this dissertation is divided into introduction, mainbody and conclusion, where the main body including the contents of thefour chapters.The first chapter provides an overview of credit rating.Throughintroducing the concept and classification of credit rating it clarifies the research issue and the scope,namely civil liability assumed by credit ratingagencies to bond investors in the context of credit rating. Meanwhile thefirst chapter also discusses the role of credit rating industry played in bondmarket and the course of development and current situation in China,which lies down the foundation for following research on the constructionof liability framework in China.The second chapter reaches the conclusion that conflicts of interestarises from the prevailing model of payment in present,viz the issuerpayment pattern is the key reason for improper rating results by creditrating agencies, through the discussion of the developments of models ofpayment.When the improper rating results cause losses toinvestors,imposing liability on credit rating agencies against investors isindispensable to alleviate the conflict of interest, regulate the behavior ofrating agencies, and to compensate investors for losses.The third chapter targets on the credit rating industry of the UnitedStates which is deemed to be the most advanced one, examines the judicialpractices and consequently distinguishes the two main business of thecredit rating industry: news publishing business and intermediary servicesbusiness. From the perspective of the author,liabilities for businesses ofdifferent nature differ,therefore in the case of news publishing businessconducted by credit rating agencies, no civil liability should be imposedagainst investors, unless there is evidence indicating their erroneous ratinginformation is deliberately released and misleading the public is what theypursue; in the case of intermediary service business engaged by ratingagencies,civil liability should be assumed on the ground of the fault of suchagencies in the process of rating.The fourth chapter points out that the cause of action for civil liabilityassumed by rating agencies against bond investors should lie in tort liability.Tort elements of specific components,include the judgment for fault and theapplication of the presumption of fault, upside down of the burden of proofof causation, identification of the scope and limits of damages.