Research On The Small And Medium-sized Investors Protection Mechanism Of China Securities Investor Services Center

Exercising shareholders’ rights and safeguarding their rights are two tools for small and medium-sized investors to protect their rights and interests.Further,they can enjoy the returns brought by good corporate governance by exercising shareholders’ rights,and use legal weapons to restore their rights to the state when they have not been harmed by securities fraud.However,due to the small shareholding,small and medium-sized investors lack the enthusiasm to exercise shareholder rights,and there is a collective action dilemma in safeguarding rights.The small and medium-sized investors’ laziness in protecting their own rights and interests leads to the low illegal cost of securities violators.The "rampant" of violators and the "Silence" of small and medium-sized investors have caused the disorder of China’s capital market.In order to enhance the enthusiasm of small and medium-sized investors in exercising and safeguarding their rights,create an effective deterrent to violators,and maintain a good capital market environment,in 2014,China Securities Small and Medium Investors Service Center Co.,Ltd.(hereinafter referred to as "ISC")was established.In addition to the introduction and conclusion,this paper is divided into four parts:The first part is the operation and existing problems of ISC’s small and medium-sized investor protection mechanism.The reason why small and medium-sized investors are not active in exercising their rights is the lack of professional knowledge.The dilemma of collective action in safeguarding their rights is the imbalance between litigation costs and litigation benefits.ISC has made targeted responses to these issues in the design of the operation of the protection mechanism for small and medium-sized investors.ISC shareholding exercise provides exercise demonstration for investors.As a professional shareholder,ISC provides free services to solve the collective action dilemma of small and medium-sized investors in safeguarding their rights.Based on the cases,reports and research reports published by ISC,this part discusses the problems existing in ISC practice through data statistics,comparison and analysis.ISC has the following problems in the exercise of rights: first,ISC’s exercise decision-making is not professional enough,and the source deviation of deterrence generated by exercise leads to the fact that ISC’s professional shareholder image is not really established;second,ISC exercise has increased the dependence of small and medium-sized investors on ISC,and the demonstration effect of exercise has not really appeared.ISC has the following problems in safeguarding rights:first,ISC’s choice of cases supporting litigation relies on pre-processing procedures,which weakens the value of ISC’s safeguarding rights as a deterrent to lawlessness;second,ISC and lawyers have source competition and ISC has competitive advantages.In the process of transforming ordinary representative litigation into special representative litigation,there is a conflict of interest with lawyers.The second part analyzes the reasons for the problems of ISC’s small and medium-sized investor protection mechanism.In the exercise,the exercise decision-making rules are unreasonable,and the importance of matching matters with means was ignored,resulting in the lack of professionalism of ISC exercise decision-making;the reason why the demonstration effect of ISC exercise is not obvious is that the audience of ISC’s own educational products for small and medium-sized investors is narrow,and the lack of professional knowledge of small and medium-sized investors has not been really solved.In safeguarding rights,the non-profit way of safeguarding rights leads to insufficient fund guarantee for ISC to handle cases;through the research on the relevant theories of non-profit organizations,this paper reveals the reasons why ISC should position itself as a complementary and transitional institution.It is precisely because ISC does not have a clear understanding of its own positioning that it will have a conflict of interest with lawyers.To sum up,the fundamental reason for the above problems is that ISC is positioned as a public welfare organization but makes too much efforts to safeguard private interests.The third part is the study and reference of the overseas small and medium-sized investor protection model.This part examines the private led model represented by the United States and the compromise model represented by Chinese Taiwan,In the comparative study,it is found that there are different problems in the protection of small and medium-sized investors under the private led model and the compromise model,It also concludes that ISC should promote the self-protection of small and medium-sized investors while ensuring the professionalism of exercise,and respect the market mechanism while giving full play to public welfare advantages.The fourth part is the improvement of ISC small and medium-sized investor protection mechanism.Adhering to the ideas put forward above,ISC should improve its work from the following aspects:first,ensure the professionalism of the exercise,guide the exercise decision-making with the principle of matching means with matters in the exercise decision-making rules,and improve the guarantee system for the professionalism of the exercise decision-making;second,improve the education of small and medium-sized investors.ISC should cooperate with securities companies and the media to form a joint force.At the same time,it should build an exercise information service platform for small and medium-sized investors,improve the professional level and risk awareness of small and medium-sized investors,and stimulate the exercise enthusiasm of small and medium-sized investors;third,broaden the fund sources of ISC to provide fund guarantee for ISC to improve its case handling ability.By increasing the number of capital contributors and establishing a reasonable cost sharing mechanism,it can effectively reduce the operating pressure of ISC;fourth,ISC should recognize its own position,explore and expose securities fraud that has not been found by regulators in supporting litigation,optimize the process of transforming ordinary representative litigation into special representative litigation,and avoid conflicts of interest with lawyers.