Original title: New Year’s Day heavyweight! The China Securities Regulatory Commission issued Announcement No. 1, referring to the “dilemma” of the capital market!The party commitment system for securities and futures administrative enforcement will be implemented today, and investors will be better able to claim compensation
On January 1, 2022, the China Securities Regulatory Commission issued Announcement No. 1 to better compensate the interests of damaged investors.
The Securities Regulatory Commission and the Ministry of Finance jointly issued the “Administrative Measures for the Commitment Funds of the Parties in the Administrative Enforcement of Securities and Futures”, which revised the “Settlement Funds” to “Commitment Funds” and issued the “Regulations on the Implementation of the System of Commitments for the Parties to the Administrative Enforcement of Securities and Futures” (referred to as “Implementation Regulations), clarify that the commitment money paid by the parties can be used to compensate investors for losses, and resolve the contradiction between the “difficulty in investigation and punishment” faced by capital market law enforcement and the market’s requirements for “quick investigation and punishment.”
Unified revision of “reconciliation money” and other expressions
In the Commitment Fund Management Measures jointly formulated by the China Securities Regulatory Commission and the Ministry of Finance, the name of the “reconciliation fund” has been adjusted to “commitment funds”. At the same time, it is also necessary to further adjust and improve the “Reconciliation Fund Measures” based on actual conditions.
One is to delete the definition of “reconciliation money”, and the “Commitment Fund Measures” delete the original “Reconciliation Fund Measures” on the definition of “reconciliation money”.
The second is to improve the management method of commitment funds. The original “Settlement Fund Measures” stipulated that “the administrative settlement funds should be turned over to the state treasury after compensation for investors.” From the perspective of the two cases where settlements were reached in practice, both were due to the absence of investor losses or loss of investors. And the loss is difficult to determine and the investor is not compensated, and the full amount shall be turned over to the national treasury. To this end, the “Commitment Fund Measures” refines practical practices and stipulates that “the party’s alleged illegal conduct did not cause investor losses, or the investor losses caused cannot be determined, or the commitment funds still have remaining funds after the investor has been compensated within the prescribed time limit. , The insurance fund company shall, in accordance with the non-tax revenue management measures and the relevant provisions of the non-tax revenue treasury centralized collection system, promptly turn over the commitment funds to the state treasury.”
The third is to clarify the upper limit of the total amount of compensation and the treatment of the commitment money when the parties make compensation on their own. On the basis of the stipulation that “insurance fund companies use commitment money to compensate investors, the amount of compensation shall in principle be limited to the losses suffered by the investors”, and further stipulate that “the total amount of compensation shall not exceed the commitment money actually paid by the parties involved in the case and used for compensation. “
Three aspects focus on difficult investigations and punishments
The “Implementation Regulations” first is to give full play to the characteristics of the system. Give full play to the characteristics of the party’s commitment system in administrative law enforcement, focus on solving difficult investigations and punishments, and improve the quality and efficiency of administrative law enforcement; at the same time, optimize the calculation, management, and use procedures of commitment funds, unblock investor compensation channels, and strengthen the protection of investors’ rights and interests. Through the application of administrative law enforcement party commitments, the commitment money paid by the parties can be used to compensate investors for losses, providing investors with a new way of timely and effective relief, which is more conducive to protecting the legitimate rights and interests of investors, especially small and medium investors.
The second is to proceed steadily and prudently. As for the commitment of the parties to administrative law enforcement, this new method of law enforcement is generally still advancing in accordance with the principle of steadiness and prudence. On the basis of complying with the provisions of the upper-level law, earnestly summarize practical experience, strictly limit the scope of application, refine and improve the handling procedures, and ensure the smooth implementation of the new system.
The third is to strengthen supervision and control. Establish a strict internal and external supervision and control system to clarify the division of responsibilities between the parties’ commitment to handle the department and the investigation, trial, insurance, and dispatch agencies to prevent moral hazards and conflicts of interest.
The insurance fund is responsible for measuring the investor’s losses
The “Implementation Regulations” are not divided into chapters and have a total of 23 articles. They mainly specify the handling procedures and the management and use of commitment funds.
The first is to clarify the coordination and connection mechanism between the commitment handling department and the investigation and trial department. The parties to administrative law enforcement promise that as a new method of law enforcement, it is a major breakthrough in the traditional investigation and punishment mechanism. New institutional arrangements are embedded in the existing investigation and punishment process, which is the backing of the service and guarantee investigation and punishment work. Therefore, three parties are required to be effective Coordinate and cooperate. For this reason, the “Implementation Regulations” require that the commitment handling department should solicit the opinions of the investigation department and the trial department on matters related to the application of the party’s commitment to the case, and combine the opinions of the investigation department and the trial department to propose whether to accept the application of the administrative law enforcement party’s commitment.
At the same time, in order to prevent the parties from abusing this system to hinder investigations, the “Implementation Regulations” clarified that the relevant application materials will not be accepted for cases that have not undergone necessary investigations, so as to ensure that the application of administrative law enforcement party commitments is reviewed on the premise that the facts of the case are basically clear; also It is stipulated that the investigation of the case shall not be suspended during the negotiation process after acceptance, and “the investigation department shall find new facts and new evidence after investigation and believe that the case should not continue to apply to the administrative law enforcement party’s commitment or has a significant impact on the communication of the party’s commitment content, it shall Inform the office in time”. However, for cases that have entered the trial stage, taking into account the need to interrupt the trial time limit, it is stipulated that the trial should be suspended after the party’s acceptance application is accepted.
The second is to make a clear commitment to the coordination and cooperation between the handling department and the commitment fund measurement department. The determination of the commitment fee is a key issue in the commitment procedure of the parties to administrative law enforcement, and it is also one of the main risks of integrity. It is necessary to strengthen supervision and control. At present, the “Implementation Measures” have improved the criteria for determining the commitment funds: including the proposed fines and confiscated funds, investor losses, and the stage of enforcement when the commitment recognition agreement is signed.
On the basis of the above requirements, the “Implementation Regulations” further improved the procedural mechanism for the determination of commitment funds. In terms of specific system design, considering that China Securities Investor Protection Fund Co., Ltd. (hereinafter referred to as the “Insured Fund Company”) is responsible for the management and use of commitment funds, and has extensive experience in investor loss calculations, it is stipulated that after entering the negotiation process, The insurance fund company is responsible for calculating the investor’s losses and submitting it to the commitment handling department. The commitment handling department shall draw up a negotiation plan based on the amount of investor losses calculated by the insurance fund company and the amount of penalties recommended by the investigation department and the trial department.
The third is to clarify the arrangements for investor compensation mechanisms. In order to give full play to the characteristics of the system that the parties to administrative law enforcement promised to quickly and effectively compensate investors, the “Implementation Regulations” further optimized investor compensation procedures. It is clear that the Investment Insurance Bureau will take the lead in coordinating insurance fund companies and other units to carry out investor compensation work, and give full play to its investor protection expertise. Specifically, the commitment fund management agency shall, after receiving the commitment fund, formulate a plan for the management and use of the commitment fund and report it to the China Securities Regulatory Commission for the record, and the Investment Insurance Bureau shall be responsible for the specific filing work. Clarify the procedures for the parties to compensate investors themselves. Where it is stipulated that the parties themselves compensate investors, the amount of commitment money may not include the amount of compensation that has been paid to investors, but the parties shall submit compensation certification materials to the Securities Regulatory Commission. The certification materials shall include the name of the investor, the details of the compensation amount and the certificate, Letter of Understanding, etc.
The fourth is to clarify the role of the dispatched agency in the commitment of the parties involved in administrative law enforcement. On the one hand, it is clear that the dispatched agency in the jurisdiction where the parties are located is responsible for verifying and accepting the parties’ fulfillment of the commitment and recognition agreement, and using the verification results as the basis for whether the parties have fully fulfilled their commitments. On the other hand, it is clear that the cases investigated and handled by the dispatched agency can be applied to the administrative law enforcement party’s commitment. At this stage, the commitment handling department will handle it in a unified manner. At the same time, it leaves room for the subsequent handling of the party’s commitment application by the dispatched agency itself. The agency handles the trial of the parties’ commitments in administrative law enforcement on their own, and the specific measures will be separately stipulated.”
The fifth is to strengthen supervision and control and strictly prevent moral hazards. The “Implementation Regulations” made institutional arrangements, established a collective decision-making mechanism, established an administrative law enforcement party commitment review committee, and the committee made collective decision-making on major issues such as accepting administrative law enforcement parties’ commitment applications, signing commitment recognition agreements, suspending or terminating case investigations and hearings ; Establish an internal supervision and control mechanism, and promise that the handling department, the investigation department, and the trial department are independent of each other. Reduce the discretionary space for the negotiated amount of commitment funds. It is stipulated that the amount of the commitment fund shall be determined strictly in accordance with the provisions of the “Measures”, and the estimation and calculation of the commitment fund shall be jointly completed by multiple departments. Strengthen the verification and supervision role of dispatched agencies in the fulfillment of commitments. Strengthen social supervision. It is stipulated that the CSRC shall announce the suspension of the investigation after signing the undertaking and recognition agreement with the parties, and the termination of the investigation after the parties have fulfilled the undertaking and recognition agreement. If the party is the obligor of information disclosure, it shall also perform the obligation of information disclosure in a timely manner.
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