In a question-and-answer update, the China Securities Regulatory Commission (CSRC) backed special representative litigation in the Dongfangtong securities misrepresentation case and voluntary advance compensation for investors. The litigation follows administrative penalties against Dongfangtong for fraudulent issuance and misrepresentation. The Beijing Financial Court has moved the case from ordinary to special representative proceedings following an application by the China Securities Investor Services Center, authorized by at least 50 investors. The center will represent investors, and the court’s registration notice explains participation arrangements and the right to opt out.

Separately, GF Securities announced on Oct. 23 that it had established an advance compensation fund with accounting firm Lixin and Qingyue Technology’s actual controller to compensate investors in Qingyue’s misrepresentation case. The China Securities Investor Protection Fund Corporation has been entrusted to manage the fund. Under the Securities Law, issuers’ controlling shareholders, actual controllers and relevant securities firms may voluntarily compensate investors in advance. The CSRC’s consultation on draft guidance, launched in October, remains underway and proposes clearer implementation procedures and support roles for investor protection institutions.

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