A Research On And Reference From Measures Of Damages Under U.S. Securities Fraud Civil Litigation

Securities fraud is a kind of fraud taking place in the securities market, of theform of securities exchange and nature of investors’ rights infringement, whichincludes but not limited to fair transaction right, fair access to public information rightand reliance interest. At the original, the U. S. courts adopted the tort liability theoryto calculate damages and recovery，with the consideration of similar rights andinterests invasion between securities fraud and traditional frauds. Frauds on thesecurities market are, however, much more complicated and diverse, hence insecurities fraud cases greater precision of analysis and exactness of calculation areneeded to compensate injured investors fairly without unjustly bankruptingdefendants. As the stock market continues to develop, securities fraud also broke theboundaries of traditional tort theory. Therefore relying solely on traditional theories oftort liability renders no relief to innocent victims. In view of this, courts at bothfederal and states level gradually developed a various of measures of damages.An examination of the relatively few U. S. federal and states securities fraudcases reaching the damages issue reveals a variety of methods by which courts arriveat the amount of damages. The following discussion classifies and explains thevarious measures appearing in the U. S. case law and further explores their underlyingprinciples, and elaborates the precise techniques by which to apply those measures.This article selects from the frequently applied theories of damages in the U.S. federaland states courts the methods most suitable to the changeable and constantlyinnovative securities market. This article also notes that damages measuring theoriesinvolving from the U. S. securities market may be satisfactory for their original placebut unsatisfactory for our unique and recently developed securities market. Theobjective of this article, through thorough and in-depth study of the well-evolved U. S.Experience, is to determine an appropriate system of measures of damages/recovery in Securities fraud suits brought by parties claiming injury from securities markettransactions, which could be essentially compatible with Chinese capital marketcontext.