The Form of Civil Liability of Securities Service Institutions in Securities Misrepresentation: Reconstruction Based Perspective

Abstract

In the context of the joint and several liability under Article 163 of the Securities Law of the People's Republic of China, it was common practice to order securities service institutions to assume full joint and several liability without distinguishing the degree of fault and the magnitude of causative potency. Even in the cases of differentiated liability, the court's reasoning on the degree of fault is relatively general and imprecise. Based on China's legislation and trial practice, this research discusses the type of duty of care of securities service institutions. Then it uses case study and comparative research methods to reconstruct the differentiation of liability in misrepresentation, taking into account extra-territorial experience. When the securities service institution commits the misrepresentation intentionally, it shall bear full joint and several liability; if the misrepresentation is caused by gross negligence, it shall bear proportional joint and several liability; if the misrepresentation is committed by general negligence, it shall bear supplementary liability. In this way, reconstructing the joint and several liability restriction in a reasonable way is the proper implementation of consistency of fault and liability.