On The Extraterritorial Jurisdiction Of China’s Securities Law

As an important medium of capital exchange,the securities market directly reflects a country’s economic development level.At present,the internationalization of China’s economic development is deepening,and the links between domestic and foreign securities markets are becoming increasingly close.At the same time,Chinese stock companies are booming,with Shanghai-Hong Kong Stock Connect,Shenzhen-Hong Kong Stock Connect,Shanghai-London Stock Connect and CDR appearing one after another.There are more and more cases of overseas securities violations damaging China’s securities market order and investors’ legitimate rights and interests.Major countries in the world have established their own extraterritorial jurisdiction systems of securities laws.These new models and problems put forward higher requirements for the original securities cross-border supervision mechanism in China.Therefore,in order to maintain a healthy and good development trend of China’s securities market,China’s securities law should actively conform to the international trend and establish a securities market supervision mechanism with complete regulations and systems based on the current reality.China’s newly revised Securities Law was officially implemented on March 1,2020.This revision has greatly adjusted and improved the original legal provisions,including the newly added extraterritorial effect clause of securities law,which established the extraterritorial jurisdiction system of China’s securities law and was also called the "long arm jurisdiction" of securities law by many Chinese scholars.The extraterritorial effect clause of securities law has changed the conservative attitude of exercising extraterritorial jurisdiction in China in the past,and extended the jurisdiction of China’s securities law to overseas for the first time,filling the legal gap of extraterritorial supervision of China’s securities market,which is a great progress in the jurisdiction of China’s securities law.However,the establishment and improvement of the extraterritorial jurisdiction system of securities law is a rather complicated process.The addition of extraterritorial provisions in China’s securities law is only the beginning of the system,and there are still many problems in the specific application of laws and supporting laws and regulations.For example,in the "financial fraud incident in Luckin coffee" in 2020,although China’s securities market regulators actively investigated the case and made corresponding punishment,by comparing the investigation and punishment results of the case in China and the United States,we can see that there are still some problems in China’s extraterritorial jurisdiction system,such as overlapping jurisdiction of law enforcement subjects,unclear responsibilities,and lower punishment standards than those in the United States.Such a phenomenon can easily cause market subjects to have psychological expectations of lower illegal costs in China’s securities market,and can not exert the deterrent effect of China’s securities law on overseas illegal activities.The extraterritorial jurisdiction system of American securities law developed earlier.In the 1930 s,American securities law and securities exchange law provided the legal basis for the establishment of the extraterritorial jurisdiction system.The extraterritorial jurisdiction of American securities law adapted to the reality at that time,provided institutional guarantee for cracking down on overseas securities violations,protected the interests of American investors,and created a favorable environment for the sound development of the securities market.However,the development of any system can not be achieved overnight.In specific legal practice,the United States constantly adjusts the applicable standards and scope of extraterritorial jurisdiction,and there are many problems such as "excessive discretion of judges","excessive jurisdiction","insufficient jurisdiction" and so on,which have affected the legal effect of extraterritorial jurisdiction and caused the long-standing controversy of extraterritorial jurisdiction in the United States.Therefore,the analysis of the development of extraterritorial jurisdiction of American securities law has a high reference and reference for the perfection of China’s securities law.A sound extraterritorial jurisdiction system of securities law can not only protect the legitimate rights and interests of Chinese investors and maintain the order of domestic securities market,but also curb and deter the abuse of extraterritorial jurisdiction of US securities law and safeguard the overseas rights and interests of Chinese investors.This paper will refer to the evolution process of extraterritorial jurisdiction of American securities law,learn from advanced experience,draw lessons from problems,base on the current practice of China’s securities market,analyze the shortcomings of extraterritorial jurisdiction of China’s securities law,and put forward reasonable and perfect suggestions.This paper mainly studies the extraterritorial jurisdiction of China’s securities market through four parts,as follows:The first part is the basic theory of extraterritorial jurisdiction.This part firstly defines the extraterritorial jurisdiction,and discusses its connotation and classification.Secondly,it discriminates the related concepts of extraterritorial jurisdiction,analyzes the theoretical basis of extraterritorial jurisdiction,and finally discusses the attitude of the international community towards extraterritorial jurisdiction-"international comity principle" and "inconvenient court principle".The second part,the current situation and shortcomings of the extraterritorial jurisdiction system of China’s securities law.Firstly,it analyzes the present situation of extraterritorial jurisdiction of securities law in China,secondly,it analyzes the applicable conditions of extraterritorial jurisdiction system of securities law in China combined with "Luckin coffee financial fraud incident",and finally,it discusses the shortcomings of extraterritorial jurisdiction system of securities law in China.The third part,the practice and enlightenment of the extraterritorial jurisdiction system of American securities law.This part mainly analyzes the establishment standards of extraterritorial jurisdiction of American securities law with specific cases,and clarifies the development process of extraterritorial jurisdiction of American securities law from "effect standard","behavior standard","mixed standard" to "behavior standard" and the amendment of "transaction standard" by Dodd-Frank Act.In addition,it analyzes the enforcement mechanism of extraterritorial jurisdiction of securities law in the United States,and provides ideas for the improvement of extraterritorial jurisdiction system of securities law in China from the perspective of law enforcement.The fourth part,the suggestion of perfecting the extraterritorial jurisdiction system of China’s securities law.This part mainly aims at the problems existing in the extraterritorial jurisdiction system of China’s securities law.It is believed that the perfection of extraterritorial jurisdiction of securities law in China should adhere to the principle of safeguarding national security and respecting the jurisdiction of other countries.Secondly,it is proposed that the jurisdiction standards should be refined and the implementation scope of extraterritorial jurisdiction of securities law should be expanded moderately.At the same time,it is proposed to establish a judicial relief mechanism for extraterritorial jurisdiction of securities law in China by drawing on the idea of setting up "blocking law" in European Union and other countries.Finally,it is discussed to improve the law enforcement system and establish a cross-border cooperative supervision system of securities regulatory agencies.