China's Securities Fraud Litigation System Construction Research

Since the establishment of Euronext Amsterdam in17thcentury, securities fraud hasbeen existed and evolved with the exchange of securities. Securities fraud violates honesty,break the market’s principles of openness, fairness and justice, disturbs the mechanism ofresource allocation in markets, seriously splits the legitimate rights of investors. Thedeceivers seek huge illegal profits by insider trading, market manipulation, undergroundcredit trading and misrepresentation. Facing with harmful securities fraud, the UnitedStates established the system of the groups of securities fraud litigation, Germany evolveddemonstrative lawsuit, and the United Kingdom revolutionized the securities representativelitigation. These countries with mature securities markets have built the system of thegroups of securities fraud litigation disputes according to their own national conditions.However, the system of the groups of securities fraud litigation and securities market is inthe bud. In2001known as "China’s first blue chip" a-shares superstar YinGuangXia felldue to the exposed false statement. After accepting symbolic fines from the CSRC,YinGuangXia was out of picture, leaving a lot of helpless investors. The reason is thatthere is no specific proceedings against securities fraud, traditional civil proceduresexposed weaknesses such as low efficiency in the new economic system. The revision ofCivil Procedure Law in2012in our country firstly put forward that public interestlitigation could be used in the case of environmental pollution and the infringement ofconsumers’ rights and interests, and the chairman of the China Securities RegulatoryCommission Xiao Gang also proposed to design the system of public interest litigation toprotect the interests of small and medium-sized investors at the end of2013. All casesshow that our country’s securities legal practice is trying to establish its own public interestlitigation system.The purpose of this paper is providing suggestions to establish public interest litigationsystem in our country. By analyzing the legal nature of securities fraud and the features ofcivil public interest litigation system, this paper points out the downsides of public interestlitigation system application in current securities market. And through comparativeanalysis on mature systems of the groups of securities fraud litigation disputes abroad, thepaper structures a good institutional framework for public interest litigation system.According to the our country concrete national condition, this paper provide advice to theestablishment for securities public interest litigation system according to current developmental situation of securities market in our country.