Gao Yanyun, reporter of CCTV Capital, reported in BeijingYesterday, the official website of the China Securities Regulatory Commission announced that the China Securities Regulatory Commission and the Ministry of Finance jointly researched and drafted the “Provisions on Matters Concerning the Preferential Use of the Property of Persons with Securities Violations to Bear Civil Compensation Liability (Draft)” (hereinafter referred to as the “Regulations”) for public solicitation. Opinion.
There are 14 articles in the “Regulations”, which clarify the specific working mechanism for the administrative fines and confiscations paid by the offenders to be used for civil compensation liability. Among them, it is clear that the aggrieved investor can file an application within one year after the people’s court issues a ruling to terminate the execution.
Professionals believe that the general idea of the “Regulations” is that when civil liability cannot be realized due to the implementation of public law property liability, the CSRC should apply for financial repatriation, so that the principle of priority of securities civil compensation liability can be implemented.
Legal practice and academic circles generally believe that the Provisions are an important measure to improve the securities civil compensation system and provide a more solid legal guarantee for the full implementation of the stock issuance registration system. important practical significance.
The difficulty of giving priority to the implementation of civil liability for compensation still exists
The background for the public consultation of the “Regulations” is that in practice, administrative penalty decisions are often made prior to civil judgments. In some administrative penalty cases, especially large-amount administrative fines and confiscations, the remaining property is often difficult to pay after the violator pays the fines and confiscations. Civil compensation payments, resulting in the failure to implement civil compensation liability.
The “Opinions on Strictly Crackdown on Securities Illegal Activities in accordance with the Law” jointly issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council clearly stated that the judicial interpretation on civil compensation caused by false statements should be revised, the pre-procedure of civil compensation lawsuits should be cancelled, and the settlement of relevant issues should be effective. to a positive effect.
It is understood that due to the complicated reality, administrative penalties will still occur before civil judgments are made, and the difficulty of giving priority to civil liability for compensation still exists.
“The original “Securities Law” established the principle of priority of civil liability for securities compensation when it was first promulgated in 1998. However, due to the lack of corresponding procedural guarantee norms and necessary supporting implementation mechanisms, this principle has never been put into practice.” Chen Jie, director, researcher and doctoral supervisor of the Commercial Law Office of the Academy of Law, told reporters.
Chen Jie pointed out that in judicial practice, because administrative penalties are ahead of civil compensation in terms of execution efficiency, when the securities civil litigation is settled, administrative fines and confiscation of illegal gains have already been turned over to the state treasury. Even if they win their civil compensation suit, they may get nothing.
During the national “two sessions” in 2021, Wang Jianjun, a representative of the National People’s Congress and then chairman of the Shenzhen Stock Exchange, submitted a proposal on promoting the mechanism of “compensation first and fine later” for securities fines and confiscations. He believes that in the context of increasing the accountability for securities violations, high securities fines and confiscations may further weaken the civil solvency of the relevant responsible persons, making the contradiction that damaged investors unable to receive timely and adequate compensation more prominent. In order to steadily advance the reform of the registration system and effectively protect the legitimate rights and interests of investors, it is necessary to deepen the implementation of the principle of giving priority to civil liability for compensation, and to establish a mechanism of “compensation first and then fine” for securities fines and confiscations.
The “Regulations” are an important measure to implement the principle of giving priority to civil compensation stipulated in the “Securities Law”. Article 220 of the “Securities Law” stipulates that “violation of the provisions of this law shall bear civil compensation liability and pay fines, fines, and illegal gains. If the property of the offender is insufficient to pay, it shall be used in priority to bear civil compensation liability” .
In addition, according to the provisions of Article 20 of the “Implementation Rules of the State Treasury”, the fines and confiscations paid into the state treasury are regarded as budgetary revenue, and can be returned to the treasury under the premise of the Ministry of Finance expressly stipulated. At present, the fines and confiscations that are wrongly paid or overpaid by the offenders can be returned to the treasury, and the relevant operations have mature practical experience.
Accordingly, it is a feasible mechanism to implement the principle of priority of civil compensation liability in the Securities Law by returning the administrative fines and confiscations paid by the violator to the treasury and using it to bear civil compensation liability.
The applicant, the application period, and the application amount have been clarified
There are 14 articles in the “Regulations”, which clarify the specific working mechanism for the administrative fines and confiscations paid by the offenders to be used for civil compensation liability, mainly including the following contents.
The first is about the subject of the application. The “Regulations” stipulate that a person who violates the provisions of the “Securities Law” needs to bear both civil compensation liability and administrative liability for paying fines and confiscations due to the same illegal act. After the court initiates a lawsuit and obtains a judgment in favor of the case or a mediation letter, the aggrieved investor who has not received full compensation after being enforced by the people’s court or allocated by the bankruptcy liquidation procedure may file a written application.
In addition, the “Regulations” show that the litigation representative in the ordinary representative litigation of securities disputes and the investor protection agency acting as the litigation representative in the special representative litigation may file applications on behalf of the aggrieved investors.
The second is about the application period and application amount. The “Regulations” specify that the aggrieved investor may file an application within one year after the people’s court issues a ruling on the termination of execution; if the offender is declared bankrupt by the people’s court, the application shall be filed within one year after the termination of the bankruptcy procedure or the end of the additional distribution procedure; if more than one year If an application is made, the CSRC will not accept it.
In addition, the “Regulations” pointed out that the amount of the injured investor’s application shall not exceed the amount of compensation that the defendant should bear as specified in the civil judgment, etc., and shall not apply for the part that the defendant has performed; For the amount of fines and confiscations actually paid by the perpetrator, if multiple aggrieved investors submit applications at the same time, and the total amount of the applications exceeds the amount of fines and confiscations actually paid by the perpetrator, the amount shall be refunded according to the proportion of the application amount of the injured investors determined in accordance with the “Regulations”.
The third is about the process. The “Regulations” show that the main contents of the handling process are as follows: The Administrative Punishment Committee of the CSRC accepts and examines the application materials submitted by the victimized investors, and understands and verifies the preliminary execution of the case from the people’s court that issued the ruling on termination of execution or the ruling on termination of bankruptcy proceedings. , Bankruptcy property distribution; the CSRC submits an application to the Ministry of Finance for withdrawal from the treasury on an annual basis.
Subsequently, upon approval by the Ministry of Finance, the relevant fines and confiscations of the offenders shall be returned to the account of the CSRC; after receiving the funds returned from the treasury, the CSRC shall promptly refund the fines and confiscations of the offenders to the aggrieved investors; the CSRC shall complete the refund process. After the formalities, the people’s court that issued the ruling on the termination of execution or the ruling on the termination of the bankruptcy procedure shall promptly notify the people’s court of the refund, and publicize the relevant information of the refund.
Maximum protection for damaged investors
The formulation of the “Regulations” marks a new progress in the implementation of the principle of giving priority to civil liability in the Securities Law. It is of great importance to implement the people-centered development philosophy, effectively protect the legitimate rights and interests of investors, and further promote the registration system reform. meaning.
“The “Regulations” specifically implement the relevant provisions of the Securities Law, further improve the actual effect of civil compensation, and reflect the people’s nature of capital market supervision. The city’s requirements.” Guo Li, a professor at Peking University, said.
Chen Jie believes that the general idea of the “Regulations” is that when civil liability cannot be realized due to the implementation of public law property liability, the CSRC shall apply for financial repatriation so that the principle of priority of civil liability for securities compensation can be implemented. This regulation undoubtedly has important practical significance for improving the securities civil compensation system and effectively protecting the legitimate rights and interests of investors, and also provides a more solid guarantee for the full implementation of the stock issuance registration system.
Xu Feng, director of Shanghai Jiucheng Law Firm, said that the CSRC formulated this detailed regulation in accordance with the law, which has important practical significance for strictly implementing the Civil Code and Securities Law, and giving priority to protecting the interests of small and medium investors. A more pragmatic move to protect the rights and interests of investors.
“Before the revision of the Securities Law, the overall amount of investor’s civil claims was not high, and the fines involved in the administrative penalty by the CSRC were lower, which made the conflict between civil compensation and administrative fines less obvious. Later, the amount of fines for administrative violations has been greatly increased, and the amount of claims filed by investors has become larger and larger. Often, the solvency of the subject of the claim, such as listed companies corresponding to such behaviors, is relatively poor. At this time, the conflict between civil compensation and administrative fines may be There will be more.” Xu Feng pointed out that the CSRC’s solicitation has more practical significance after the revision of the Securities Law.
A more general view holds that when investors suffer losses due to the actions of securities offenders, it is the greatest protection for investors to obtain economic compensation as soon as possible through certain mechanisms. The formulation of the “Regulations” to enable investors to obtain tangible economic benefits by withdrawing from the treasury when certain conditions are met is an important measure for the capital market to implement the people-centered development philosophy and improve investors’ sense of gain.
Editor: Li Huimin
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