Research On The Determination Of Materiality For Securities Misrepresentation

From the judicial practice of the U.S.securities market,the information disclosure system has turned gambling in the capital market into a "fair game" with laws to follow and reversed the decadent situation in the capital market.What kind of information must be disclosed,what is the degree of disclosure,and a series of issues are important propositions that the designers and implementers of the information disclosure system have to consider-the issue of "materiality".TThe determination of materiality is crucial to the information disclosure system and relates to the stable operation of the entire securities market.This article was completed after the Supreme People’s Court promulgated the "Several Provisions of the Supreme People’s Court on the Trial of Civil Cases for Damages for the Tort of Misrepresentation in the Securities Market" in 2022,which conforms to the development needs of all parties in the securities market and aims to conduct in-depth research on the determination of materiality and promotes the development of judicial practice in securities misrepresentation cases in China.At the level of theoretical foundation and legal system,the basic theories on securities misrepresentation in China has borrowed the criteria of some foreign countries,mainly including "price sensitivity criteria" and "investor decision-making criteria",as well as other refinements generated on these bases.The thesis mainly studies the first two major criteria.The materiality determination criteria are not set in stone.They change with the maturity of the securities market and the investment abilities of investors.In the course of more than 30 years of development,China’s securities market has experienced the registration system,the registration and issuance system and the preceding procedures.They are three key nodes in the procedure.And now,in the context of the reform of the new judicial interpretation,judicial practice also needs to develop in line with the changes in policies and markets.At the level of empirical analysis,due to the existence of pre-litigation procedure,administrative penalties or criminal sanctions had always replaced the independent review of materiality by courts,so this thesis separately analyzes the determination of materiality in securities misrepresentation cases in administrative penalties and civil trials in recent years,it carries on the statistics to the related type case,uses the method of the data analysis and the tendency analysis to reflect the current situation of judicial practice.Before canceling the pre-litigation procedure,the court directly relied on administrative penalties to determine materiality,and with the reform of the registration system,the pre-litigation procedure was loosened and now the pre-litigation procedure has been definitely cancelled.The court begins to determine the materiality based on the administrative penalty decision and the materiality standard or adopt the materiality standard for independent examination.Therefore,judicial review of materiality has gradually become the focus of discussion among theorists and the judiciary,but in trial practice,there are still problems such as lack of independence of court review and determination,wavering choice of materiality standard among courts,and poor operability of materiality standard.In response to the above dilemma of judicial determination,the final section of this thesis focuses on exploring a method of determining materiality that is suitable for our basic national conditions.The new judicial interpretation clarifies the court has the right to independently examine determination of materiality,the content of the administrative penalty decision should be used as general evidence to determine materiality with defensibility.In view of the current situation that courts lack sufficient experiences in law enforcement,further detail needs to be made on the coordination assistance to courts in hearing misrepresentation cases,and full attention should be paid to compound talents similar to forensic accounting professionals;The design path of materiality determination is "rules first,principles second",and clarifies the application sequence of price sensitive criteria giving priority,investor decision-making criteria underpins,and event studies assists in the determination of facts;and explore a rational investor image suitable for our country’s national conditions.