Financial Fraud And Investor Protection

Feilo Acoustics financial fraud case is the "first case",which adopts the ordinary representative litigation system in the field of China’s securities false statement cases.In the past cases of the same type,the judicial practice often adopted the mode of joint litigation,which showed some deficiencies and disadvantages."The first adoption" not only significantly improves the protection level of small and medium-sized investors’ interests in China,but also reflects the continuous improvement and development of China’s capital market and its related supporting systems.Capital market is an important part of the market economy,an important source of funds for listed companies,and a vital driving force for economic development.However,we should also realize that our capital market is still immature.There seems an endless stream of financial fraud events.Many companies and their managers even take risks driven by interests and sacrifice the profit of small and medium-sized investors.The case such as "Zhangzi Island " and "Kangmei Pharmaceutical" has drawn public attention.On the one hand,these illegal acts have destroyed the order of the capital market.On the other hand,they have damaged the interests of the small and medium-sized investors.Although the small and medium-sized investors play a vital role in our securities market,they are still in a weak position due to their own characteristics.Therefore,protecting the interests of small and medium-sized investors is an unavoidable problem in the development of the capital market.How to protect small and medium-sized investors? In which dimensions should they be protected? This will be the theme of this thesis.On March 1st 2020,the new version of the Securities Law has been put into practice.Afterwards the Supreme People’s Court issued the provisions about representative litigation on July 20 th 2020.According to the new provisions,detailed regulations on the representative litigation in the securities field has been made,and defined a series of contents such as the scope of application,classification,determination method of representative for the first time.As a result,new changes have taken place in judicial practice as well.On November 1st,2019,the CSRC issued an administrative punishment to Feilo Acoustics,and identified the existence of financial fraud.Investors whose interests were damaged also filed a civil compensation lawsuit against Feilo Acoustics,and applied the ordinary representative litigation system for the first time.This thesis will make a comprehensive exploration and analysis of this case from the perspective of investors protection.The specific contents are as follows:The introduction part is the overall grasp of the article,and expounds the background,research significance,research ideas,research content and so on.In the first chapter,this thesis mainly divides investor protection into two dimensions: regulatory protection and litigation protection and takes turn to analyze them.In the second chapter,this thesis analyzes the reason and impact of the financial fraud.The third chapter expounds the traits and effects of the two kinds of investor protection respectively.The third chapter analyzes the shortcomings of regulatory protection and litigation protection from the perspective of investor protection,and gives corresponding suggestions from the relevant perspective.The conclusion and outlook part is the outlook for the future development of ordinary representative litigation on the basis of summarizing the full text.