Research On The Incentive Mechanism Of Securities Class Actions In China

Article 95,paragraph 3 of Securities Law creatively provides for the securities class action of China,in which investor protection institutions act as special representatives and participate in the litigation in order to overcome collective action problems and protect the rights of investors.However,the litigation system led by the investor protection institutions may have insufficient incentive.If it cannot be resolved,the litigation will be difficult to start.However,the current legislation is not in place to establish an incentive mechanism for securities class action of China.It is manifested as: the legislative concept is biased,the legislative content is simple,and a multifaceted and comprehensive incentive mechanism has not been formed.The insufficient incentive mechanism will make it very difficult for investor protection institutions to operate,because it will face the problem of small number of employees and a lot of affairs.Besides,it may cause an embarrassing situation that investor protection institutions will not be willing to participate in the litigation and the number of cases will decrease.Therefore,in order to solve the above problems,from the perspective of case diversion,other securities litigation should be properly used to divert cases.Besides,the number of investor protection institutions should be increased to introduce a competition mechanism,which can reasonably decentralize litigation tasks.From the perspective of reducing the cost burden of investor protection institutions,the existing litigation cost burden mechanism should be optimized.From the perspective of reward,the winning reward mechanism should be added,and material and spiritual reward should be used to achieve superficial and deep incentive for investor protection institutions.Finally,from the perspective of providing necessary support and assistance,the supporting litigation mechanism related to relevant entities should be improved and measures to encourage lawyers to participate in the litigation should be taken to enhance the litigation capacity of investor protection institutions.