Research On The Establishment Of Securities Investment Compensation Fund System In China

The concept of Securities Investment Compensation Fund System is When securities infringement incidents(i.e.,false statements,insider trading,market manipulation,etc.)occur,a special compensation fund is set up to compensate the injured investors.The fund include two types: the first type is set up by the securities offenders or the related regulatory entities;the second type is established by the supervising entity using penalties for fines or other money income.The main feature of the fund is the �preemptive recovery� for compensation,so it can provide quick compensation for injured investors.The fund is a non-litigation post-investment investor relief mechanism.The main function of the fund is to protect the investor's rights and interests as well as to compensate for the lag in litigation.In our country's securities market,there exist some practice cases about the compensation fund,they are �Edmond branch� and �sea Nexis� and �Xintai electric�.All of them belong to the first type of funds described above,and have commissioned third-party fund companies to conduct custody;While in some foreign country,there already exist some more experienced cases about the compensation fund system,such as the United States �fair fund� system and Quebec Canada's �financial services compensation fund� system.Both of them belong to the second type of fund,they use fines or confiscations of property as the fixed source of funding for the fund.The cost of rights protection for investors is extremely high in our country,and the effect of judicial remedies for securities disputes in our country is also not optimistic.In addition,in order to stabilize investor confidence in the securities market,it is necessary to build a compensation fund system in our securities market.Meanwhile,Under the guidance of the China Securities Regulatory Commission,which have rich management experience in securities regulation,the compensation fund can be well-running;Furthermore,our country civil law also provides the legal basis for the fund,so the construction of the fund system is also feasible.In the vision of institutional construction,there are four aspects will be discussed: source of funds,object of compensation and scope of compensation,fund operation and fund supervision.First,in sources of fund:The first is to absorb illegal income and fines as a guarantee of funds;The second is to expand the scope of funding sources and increase more types of fund;The third is to absorb lessons learned from the China Investor Protection Fund and avoid problems that have occurred in the Investor Protection Fund.Second,the main target of compensation for the fund should be minority investors;The occurrence of �Infringement� is defined as the payment condition of the fund,and the securities trading time period is defined as the payment range of the fund.Third,in fund operations: First of all,we should adopt �one case and one design� operation mode;Then,the fund will hire a third-party professional fund management agency as the trustee;Finally,the subject of the compensation should be clearly defined in the legislation.Fourth,in fund supervision,The China Securities Regulatory Commission is the main body of supervision,and it is mainly responsible for supervising the trustee.