A Study Into The Materiality Standard In Securities Law

The information disclosure system is one of the most important systemsrelated to securities market which affects the transparency in thesecurities market. Ordinary investors make their decision based on theinformation they know. Therefore, the degree of transparency, whichreflect the quality and quantity of the information, will indirectlyaffect the decision-making of the investors.In order to maintain the fairness of law, almost all the countriesover the word make rules in their information disclosure system toidentify what kind of information should be disclosed in order to divideinformation by its characteristic, aiming to achieve a balance betweenthe investors’ interest and issuers’ fairness."Materiality" standard issuch a dividing line between what information should be disclosedcorrectly and everything else.A very long history witnesses U.S."Materiality" standard. Both theSupreme Court and SEC have authority on "Materiality" standard whenSupreme Court make formulation for identifying "Materiality" in itsholdings and SEC try to regulate "Materiality" in separate rules.The information disclosure system in China has just been establishedin the recent years. The court normally fails to give explanation orinstruction for "Materiality" standard. Moreover, seldom is there anylawsuits regarding "Materiality". However, the China Securities Regulatory Commission (CSRC) plays a main role in explaining andidentifying "Materiality" by administrative measures.Difference and similarity both exist for China and U.S."Materiality"standard. This essay aims to provide suggestions for improving China"Materiality" standard through comparison and analysis of the concept,rules, proving standard and etc.