Private Enforcement of Securities Law in China: A Ten-Year Retrospective
This paper undertakes the first comprehensive study of the nature and extent of private securities litigation in China, critically examining whether private securities litigation has been effectively carried out during the first decade after it was formally permitted by China’s top court in 2002. Methodologically, it goes beyond the doctrinal analysis as commonly seen in the extant literature on the subject matter to empirically investigate both the quantity and quality of securities civil action in China. It is found that there have been a much-lower-than-expected number of securities civil suits in China under the ten-year study period, but the percentage of recovery generated by securities civil suits in China is significantly higher than that in the US. The policy implications of the empirical findings are discussed with a view to improving the Chinese legal regime for private securities litigation. In particular, it casts doubts on the popular belief that China should adopt the US-style class action. Further, as the local courts are found to be dysfunctional in handling securities civil cases, a reform proposal is made to advocate the choice of the court for bringing securities civil action in China.