On The System Of Representatives Of Securities Fraud Group

The securities business in China has witnessed many remarkable achievements in the latest three decades of development, but, at the same time, the number of the disputes caused by securities fraud has also increased. Because of the characteristic of securities fraud, litigation caused by securities fraud is often group litigation with numerous plaintiffs.Therefore, we should further study to improve the litigation representative system in Chinese Civil Procedure Law and let it play a bigger role in the field of securities fraud. This paper takes advantage of such research methods as literature research, comparative approach, the logical method of induction and case study. And the main theme of the paper is to analyze the application of representative action system in the field of securities fraud. The first part of the paper focuses on the elaboration of the relevant theories; the second part describes the status quo of group litigation arising from securities fraud; the third part analyzes several shortcomings of the current representative action system in Chinese Civil Procedure Law; the fourth part proposes some measures to take.The first part is an overview of the representative action system and securities fraud in China. This part summarizes several basic problems of securities fraud, and analyzes the concept and characteristics of the group litigation for securities fraud. This part also reviewed relevant provisions on the representative action system and then points out that the representative action system, if applied in securities fraud disputes, would realize remarkable public value, economic value and deterrent value.The second part points out the present situation of the representative action system of our country is: being evaded. This part analyzes the statues and Judicial Interpretations on securities fraud litigation in our country, and finds that the representative action system designed for group litigation in Article 54, Chinese Civil Procedure Law is selectively neglected in the field of securities fraud litigation. After analyzing three cases as well as the general status quo of litigation in Chinese securities f&aud litigation, the author points out that the representative action system is not only neglected in legislation,but also ignored in practice.The third part points out the existent shortcomings of the representative action system in our country. This part compares the different backgrounds of the enactment of group litigation system in China and western countries, and reveals that the first problem of the representative action system in our country is the deviation of the value pursued.The second problem is the lack of detailed operative instruction, especially compared to the chief plaintiff system of the American group litigation; Finally, the author believes that the third problem, if compared with the United States and South Korea, lies in the lack of full protection of the majority's rights in group litigation.The fourth part is suggestions on improving the representative action system applied in the securities fraud litigation. The author argues that we can not blindly transplant anything for foreign legal families, and should rather improve the existing representative action system gradually according to Chinese actual conditions. First of all, we should allow the disputes on securities fraud be filed as a case in the form of representative action system. Secondly, the representative action system should be given a clear value and aim.Thirdly,the relevant provisions of the representative action system must be refined. Finally, more attention should be paid to the protection of procedural rights of the parties represented by the representative.