China's Supreme People's Court and the China Securities Regulatory Commission have issued joint guidance aimed at tightening fair and consistent enforcement and adjudication in the securities and futures sector, with a focus on stronger investor protection, clearer judicial application of capital markets rules, and closer coordination between courts and regulators. The guidance prioritises regular use of representative litigation in securities disputes and reinforces suitability obligations for securities, futures and fund institutions and distributors, including civil compensation where suitability duties are breached. It calls for tougher action against fraudulent issuance and ongoing disclosure fraud, with accountability extending to issuers, controlling shareholders and actual controllers, intermediaries, and third parties that instigate or assist falsification, and supports mechanisms such as advance compensation and administrative commitments to compensate investors. Courts are instructed to improve consistency in misrepresentation civil liability cases, including approaches to transaction causation, materiality and loss calculation, and to implement the principle that civil compensation takes priority in the allocation of case-related assets, coordinating civil, administrative and criminal procedures to avoid duplicative sanctions. On market conduct and risk, the document addresses judicial handling of disputes involving complex products and potential regulatory evasion, private fund disputes and misconduct, bond default disposal coordination, and execution practices involving listed shares subject to lock-ups or selling restrictions. It also sets out enhanced dispute resolution and information-sharing arrangements through existing “total-to-total” online litigation-mediation mechanisms, expanded case clue reporting and evidence coordination, and closer administrative enforcement linkage including a “criminal referral first” approach where relevant. Further work is flagged on developing judicial interpretations and related documents in areas such as civil liability for insider trading and market manipulation, offences harming listed company interests, private fund crime guidance, and rules for cross-border application, alongside joint publication of guiding and typical cases.
China Securities Regulatory Commission 2025-05-15
China's Supreme People's Court and China Securities Regulatory Commission issue joint guidance to strengthen enforcement and judicial coordination for high quality capital market development
China's Supreme People's Court and the China Securities Regulatory Commission issued joint guidance to enhance enforcement in the securities and futures sector, focusing on investor protection and judicial clarity. It emphasizes representative litigation, suitability obligations, and accountability for fraud, while improving dispute resolution and coordination between civil, administrative, and criminal procedures. It addresses complex product disputes, bond default coordination, and sets a "criminal referral first" approach for enforcement.