Routing Selection Of Resolution Mechanisms For Securites Dispute

Through the issuance and transaction of securities, securities market, which is a very important part of the market economy, effectively connects financiers and investors and solves the problem of capital supply and demand contradiction which results from the fact that the financers lack of money while the investors own a lot. Therefore, for every country, developing the securities market becomes the theme of the nation’s progress. Born in1990s, China’s securities market has experienced up and downs in the past20years. By summarizing every country’s experience, we can easily find that the protection of investors’, especially the minor investors’ interests, and the providing of sound dispute resolution mechanism for all kinds of securities disputes, caused by securities fraud, are the preconditions of development of securities market.In contrast, reports about the difficulty of investors’ rights protection are commonly seen in China. Even though we have already established the representative action system in respect of mass dispute which includes securities disputes, this system is not effective in practice. Under this circumstance, many scholars look to the American where the capital market is highly developed. They hope the class action system used in America for the securities dispute can solve the problem happened in China. However, the author of this paper holds the opinion that both the representative action system and the class action system cannot resolve the Chinese securities disputes or protect the minor investors’rights. Due to some subjective and objective elements existing in Chinese judicial system, the action system itself is not suitable for the securities disputes resolution in China. For this purpose, we should ponder the protection of minor investors’interests from a brand new angle. So the author proposes an alternative dispute resolutionsecurities arbitration, and gives the reason, that is, compared to litigation, the arbitration has huge advantage and feasibility. According to this chain of logic, the contents of this paper are divided into three parts:The first part is about the current situation of the protection of minor investors’interests. According to the legal theory of investor protection presented by LLSV and from the perspective of legislation, public enforcement of law and private enforcement of law, this part analyzes the shortage and defect of investor protection in China, and then leads to the theme of this paper:how to protect the investors’interests.Part two analyzes the problems existed in the process of solving securities dispute by litigation. Firstly, the author reveals the fact that the representative action system is not useful in practice and briefly analyzes the problems existed in the theory and practice of such system, then the author draws the conclusion that the representative action system cannot fix the problem that minor investors’interests are insufficiently protected in China. Second, in respect of the suggestion that transplanting American class action into China, the author, after briefly introducing this system, explicitly analyzes the problems class action has caused in practice. Besides, through empirical research, the author points out that although the American congress enacts two laws in a row to solve these problems, the two laws do not settle the matter of frivolous lawsuit and insufficient protection of investors’interests. At last, after presenting the defect of representative action system and class action system, the author explains why the action system is not suitable for resolving the securities disputes in China. On this basis, we should not stick to the action system. Instead, we should seek other dispute resolution mechanism. In the third part, the author suggests that we should resolve the securities dispute with arbitration mechanism. To prove such viewpoint, the author explicitly analyzes the advantages arbitration has towards investors, listed companies and the country, as well as the feasibility of promoting securities arbitration in China. At last, the author presents some issues need to be noticed during the practice of securities arbitration and some advice.