Cao Zhongming: Three Plans For Administrative Reconciliation Pilot

At a news conference held last Friday, a spokesman for the securities and Futures Commission said that the SFC has drafted a pilot scheme with relevant ministries and commissions, and is further demonstrating.

In fact, this is not the first time the regulatory authorities have talked about administrative reconciliation.

As early as 2007, the relevant departments of the securities and Futures Commission formulated the draft "Interim Provisions on administrative settlement of securities and futures", but I did not know why.

Last year, the State Council issued the "opinions on Further Strengthening the protection of the legitimate rights and interests of small and medium investors in the capital market", and proposed to "explore the establishment of the administrative settlement system in the securities and futures field and carry out the pilot of administrative reconciliation."

In February this year, Xiao Gang, chairman of the securities and Futures Commission, published a signed article entitled "a new mode of administrative reconciliation for actively supervising and executing the law" in the Journal of administrative reform. It expounded the significance of promoting the administrative reconciliation system, and suggested that the two cases of suspected insider trading, manipulation of the market and securities fund Futures Company suspected of fraudulent sales and misleading investors could consider giving priority to the trial.

The reconciliation system is widely used in mature markets such as the United States.

For example, more than 50% of the cases in the US Securities and Exchange Commission (SEC) were reconciled before entering the formal civil or administrative adjudication procedures, and a large number of cases were reconciled in the process of litigation / adjudication.

In the case investigated by SEC, only about 10% of the final administrative proceedings were completed by civil or administrative judges.

For example, the $1 billion 400 million settlement of the $10 billion investment case of the Wall Street 10% investment bank for Enron and WorldCom is an example of AIG 16.4 billion dollar settlement.

In the process of ultra normal rapid development of China's capital market, the institutional defects in the protection of investors' legitimate rights and interests are extremely prominent. Even in the case of illegal and illegal facts of listed companies, the investors' rights protection is also very difficult.

Moreover, the disadvantages of low violation costs have been difficult to eliminate. Under such a background, it is obviously not conducive to the healthy development and long-term stability of the capital market.

Statistics show that between 2006 and 2012, 122 cases of false statements dealt with by the SFC, during which only 46 of the 46 listed companies were partially sued by civil compensation litigation, involving an amount of about 384 million yuan, and finally a compensation of about 67 million yuan.

Even compensation is only part of it.

In recent years, the fund's "rat farm" and other types of insider trading and frequent manipulation of stock prices have been frequent. Investors are still losing their interests because of their interests.

Not only that, investors are often faced with difficulties in filing cases, difficulties in lawsuits, difficulties in opening court proceedings and difficulties in enforcement. Litigation process is like a marathon. It often takes many years to get results.

It is also because the rights protection is too difficult for many investors to retreat.

Therefore, if the regulatory authorities can promote the administrative reconciliation system in the future regulatory practice, it will not only improve the efficiency of supervision and law enforcement, but also be of great benefit.

Protection of interests.

Act as

In order to promote the administrative reconciliation system, the author thinks that we must pay special attention to the following three aspects: first, the definition of the nature of the case.

For those illegal and illegal cases with unclear legal provisions, vague judgment of the nature of the law, and insufficient enforcement basis, but obviously damaging the interests of investors, the administrative reconciliation procedure should be initiated.

For the big cases such as the green earth and the Wanfu Sheng Ke (300268), which can detect illegal and illegal facts and cause adverse effects in the market, we should be cautious in starting administrative reconciliation procedures.

Generally speaking, the administrative conciliation system should be mainly applied to cases where the market has little influence and the degree of harm is relatively small.

Second, we must avoid heavier punishment and lighter punishment.

The administrative conciliation system achieves two main purposes: economic sanctions against illegal offenders and economic compensation for investors with impaired interests.

Investors' rights and interests should be protected effectively, but we can not start the administrative conciliation proceedings arbitrarily in order to protect the interests of investors.

In this way, it is possible that the illegal and illegal acts that have been severely punished can be evaded by the way of reconciliation, resulting in the violation of the offenders without paying the price they should pay.

It is also particularly important to note that in administrative reconciliation, regulatory authorities can not retain the right to be rent-seeking space.

Third, the launch

At the same time, the regulatory authorities should also vigorously promote the trial of group litigation system.

The group action system has been appealed for many years in the market, but no substantial progress has been made yet.

In fact, the class action system is more suitable for the A share market with low violation cost and difficult investor rights protection.

The group action system is a real right weapon for the small and medium-sized investors, and also a "sword of Damour and Christopher" hanging over the top of the market violators.