A Study On Civil Liability Of Securities Analysts

In the securities market, the securities analysts’ job is to provide investment advices to investors by explaining and predicting the changes in the value of securities, the development of economic policy, the inner truth of statistical data and other relevant informations. The securities analysts should be independent and integrity, prudential and objective, industrious and dutiful, justice and fair. In China, all of the practising securities analysts are sell-side analysts or buy-side analysts.For securities analysts, the violation of civil obligations is a prerequisite to bear civil liability. And the essential element is the counterpar suffered the actual damage. The academics have been discussing what is the nature of the civil liability of securities analysts. There are two points of view:the liability of breach of contract or the tort liability. The author considered that the buy-side analysts should bear the liability of breach of contract and the sell-side analysts should bear the tort liability.The civil liability of securities analysts generally is suitable fur fault liability principle. For buy-side analysts, the "fault" means fail in the duty of loyalty. And the the sell-side analysts will bear legal responsibility for violating their attentive obligation. Where the employer believes that the loss is caused by the buy-side analysts, while the buy-side analysts does not believe so, the buy-side analysts shall bear the burden of proof. Inversion of onus probandi is an important onus probandi distribution rule to prove sell-side analysts’"fault". Expert evidence system is also playing a very important role in the process of proving "fault".The best way to assume civil liability is compensation for damage. The amount of compensation shall be strictly limited to the investors’ real losses cased by the securities analysts’ fault. Buy-side analysts signed employment contracts with the employer. It is clear that they should take the blame when there behavior threaten the employer’s rights and interests. But in most cases, there is no contracts between the sell-side analysts and the investor. The sell-side analysts and their employer shall bear joint responsibilities to the victims. Where the employer makes any compensation, they may recourse the payment to the relevant person as held responsible. But the employer’ right of recourse should be restricted. The compensation amount depending on whether or not the employer benefit, whether or not there were administrative misstep, Whether or not to hire qualified analysts and other relevant circumstances.The civil liability of securities analysts has many problems in the application of laws, mainly including:low-level legislation has resulted in a lack of binding; there is no comprehensive security code and unified the civil liability of securities analysts legal system; the work of legislation is very slow in action; the self-regulatory organisation of the securities analysts is lack of oversight; the lawsuit system is not suitable for charges and so on.Some measures must be taken to reduce the securities analysts’ illegal activities, maintain the market order and protect the legitimate rights and interests of investors. First of all, we should set up effective supervision mechanism through perfecting the laws and regulations. Secondly, we must set up trade self-regulatory group to carry out self-regulation. Third, designed something better in the representative litigation is beneficial. Finally, it is necessary to establish the liability insurance system in the securities analysts industry.