Research On Civil Liability Of Investment Fund Custodians

Since the establishment of the first investment fund in China in the past year,this indirect investment has become a favored investment method for small and medium investors,with invested by experts,small investment,scattered risks and stable income.At the same time of the rapid development of both public funds and private equity funds in quantity and scale,the illegal operation of the fund practitioners and the improper operation have occurred from time to time.The fund blackouts and violations from time to time have not only greatly hurt the interests of fund investors,but also triggered a crisis of confidence and exposed the governance loopholes and potential risks in the fund market,even worse,it may trigger a violent shock in the entire financial market.Although the development of China's fund market is not yet mature,the lack of credit for fund employees and organizations and the weak supervision of government departments are the reasons of the emergence of the aforementioned problems,but the failure of the internal governance and supervision mechanism of the fund industry is even more difficult to blame.In particular,the recent case of the Fuxing has exposed the fact that the fund custodian has no way to supervise the behavior of the fund manager,so that it is impossible to know the fund manager's dereliction of duty in a timely manner and accurately define the legal responsibilities of fund custodians to effectively prevent the losses of fund investors from further expanding when the fund manager cannot perform normally.All of the above are closely related to the defects of the legal system of fund custodians in China.Therefore,it is important to clarify the legal relationship between the legal subjects of funds in China,define the legal status of the fund custodian.Furthermore,according to the fiduciary duty of the fund custodian,combined with the basic theory of civil legal liability in the civil law,the civil liability of the fund custodian in China is studied.As a result,we can explore the institutional obstacles and practical reasons for the poor supervision of fund custodians in order to make up for the current funds in China based on the legal status of fund custodians.The writing purpose of this paper is to explore the institutional obstacles and practical reasons for the imperfect system of the civil liability of fund custodians in order to make up for the institutional defects of China's current fund legal system,and improve the civil liability system of fund custodians in China in order to promote the fund custodians to actively perform their duties.Therefore,it is of great significance to change the chaos of China's fund industry at the root cause and protect the legitimate rights and interests of fund investors.This paper uses a combination of theoretical analysis,normative analysis and comparative analysis methods.Firstly,it analyzes the legal relationship between fund investors,fund managers and fund custodians under different fund types,through the detailed analysis of the current laws and regulations of the fund custodians and industry norms in China.Secondly,it sorts out the existing theory about the legal status of fund custodians,combining internationally representative funds.Then in order to lay the foundation for the characterization of the legal status of fund custodians under the existing laws of China,it analyzes the internal relationship between the theory of the fund custodian's legal status,compares the advantages and disadvantages of the fund custodian system in each country and explores the design reasons of the fund custodian system in each country.Eventually,the conclusion that the fund custodian is the special joint trustee,combined with the current legal provisions.However,since the legal relationship of the fund is different from the specificity of the trust law,although the fund custodian and the fund manager are in the joint trustee status in the trust law,it cannot be concluded that the fund custodian should apply the joint liability according to the identity of the trustee's joint trustee.It is necessary to combine the theory of civil liability and the particularity of the investment fund in order to make a comprehensive consideration of the civil liability of the fund custodian,and then make a conclusion that the fund custodian only bear the respective responsibility in legal liability.Based on this,we find problems in practice from a theoretical perspective,explore the predicament of pursuing the civil liability of fund custodians under the current legal system in China,and combine the value orientation of fund legislation to put forward its own opinions and ideas to improve the fund custodian's civil legal liability system in China.This article is divided into four parts.The first part is the elaboration of different types of investment funds,and the legal relationship between fund investors,fund managers and fund custodians under different types of investment funds.The primary premise of exploring the legal status of the fund custodians is to analyze whether the legal relationship of the fund custodian is a trust relationship,a entrustment relationship or a custody relationship,thus indicating the direction for the theoretical analysis of the following.The second part is mainly to sort out the theory about the legal status of the fund custodian and its corresponding legal responsibility.In the doctrine of the legal status of the fund custodian,there are mainly the joint trustee said,the agent said and the custodian said.In the comparative law,the joint trustee said adopted by the UK fund custodian system,the fund custodian system in Japanese law is more in line with the agent said,and the fund custodian in German law only assumes the responsibilities of the custodian.This paper analyzes the above three theories,and combines the existing fund legal system in China,based on the trust attribute of the fund legal relationship,defines the special joint trustee in the legal relationship of the fund custodian fund in China,which lays a theoretical foundation for judging the legal responsibility of China's fund custodian in the third part.However,the joint trustee said that the fund custodian has two theories of joint trustee's joint responsibility and separate responsibility.Due to the special nature of the fund custodian's civil liability,in order to accurately judge the civil legal responsibility that it should bear,it is also necessary to combine the basic theory of civil legal liability in the civil law.It is concluded that the fund custodian has the principle of taking respective responsibility,taking supplementary responsibility and joint responsibility as exception.In the fourth part,this paper points out the dilemma of investigating the civil liability of fund custodians under the current legal provisions of China firstly,such as the lack and confusion of the overall legislation of the fund custodian industry,mere formality of the fiduciary duty of the fund custodian and the unsound system of the civil liability of the fund custodian.In view of the above problems,the author puts forward the legislative proposals for perfecting the civil legal system of fund custodians in China based on the basic value orientation of China's fund legal system and the experience of extraterritorial use,like formulating a unified investment fund law,clarifying the fiduciary duty of the fund custodian and improving the system of accountability for the fund custodian's civil liability.The fifth part is the conclusion part of this paper,which summarizes the key issues and arguments in the whole paper.Although the starting point of this paper is to explore the civil liability of China's fund custodians and improve their civil liability system based on the protection of the legitimate rights and interests of fund investors,there is a certain limit to the investigation of their civil liability,which means that we should protect the legitimate rights and interests of the fund custodian in the same time.The fund custodian shall not be required to assume the civil liability of the fund manager offside,nor shall it blindly increase the obligations and responsibilities of the fund custodian.