The Anatomy of Securities Class Action in China: A Functional and Comparative Approach
(2018) 46(4) Securities Regulation Law Journal 365-402
43 Pages Posted: 3 Sep 2019 Last revised: 31 Oct 2019
Date Written: August 15, 2018
Private securities litigation in Mainland China (China) can utilize a civil procedure to aggregate multiple suits arising from the same securities misconduct, which is sometimes dubbed Chinese-style securities class action, as it bears some resemblance to the securities class action in the US, but there are some important differences between them. In assessing its efficacy and future direction of development, it is necessary to put China’s securities class action into a broader context, examining the interaction that private securities litigation has not only with public regulation, but also with other modes of securities dispute resolution, including public interest group litigation and non-judicial proceedings such as arbitration, mediation and recently established special forums for securities dispute resolution. From a functional perspective, public regulation and other modes of dispute resolution may have the effect of replacing or substituting for securities class action, while at the same time, they may complement or reinforce each other. Drawing upon empirical findings and comparative insights from the US, Hong Kong and Taiwan, it is submitted that China’s securities class action has operated as an alternative to its US counterpart, and that although the strengthening of public enforcement and alternative private enforcement may reduce the need for securities litigation, it will continue to play an indispensable role in protecting investors in China.
Keywords: securities class action; public regulation; alternative dispute resolution; securities law enforcement; China
JEL Classification: K22; K41
Suggested Citation: Suggested Citation