A Study On The Civil Liability Of Bank Underwriting

Bank underwriting is a new trend in banking business. But there are lots ofproblems in result of seldom civil liability terms in our law. This paper analyzes thedominant position and duties of a bank in bank underwriting, thus build a system ofa bank’s civil liabilities. This paper is consisted of five sections as follows:The first part focuses on banks’ problems in bearing their civil liabilities,describes the disorder of the underwriting market as well as the blankness in judicialpractice and the weakness in theoretical researches.The second part describes the roles of a bank in bank underwriting.In this case, abank serves as an underwriter, an investment adviser and a credit seller. The bankneeds to be responsible to the interests of the investors, the security dealers andthemselves at the same time, leading to the conflicts when the bank has to choose.The third part analyses the duties of a bank in bank underwriting, includingcontractual obligations, fiduciary obligations and vicarious obligation. In contractualobligations the bank should bear the obligation whether the contract is written or not.The fiduciary obligations includes the principle of know your client and applicable,due diligence, information disclosure and so on. The vicarious obligation means abank needs to be responsible for its employees’ behavior.The fourth part describes the bank’s civil liabilities. A bank’s civil liabilitiesinclude breach of contract and tort liability. In the contract part, the paper analyses theelements of breach of contract, the identification of the loss and the defenses. In thetort part, the paper describes the different liabilities when a bank violates the duty ofcare, fraud and misleading.The fifth part is a reflection of our law in the problem of a bank’s civil liabilitiesin bank underwriting. Proposing clear the fiduciary obligations of banks, establish thepenalties when a bank violates its duties, establish special protection principles for theelderly.