On 11 March 2022, the China Securities Regulatory Commission (CSRC) and Ministry of Finance jointly published the “Regulation on Matters Regarding the Priority Use of Property of Violators of Securities Law for Civil Compensation (Draft)” (hereinafter “the Regulation”, 關于證券違法行為人財產優先用于承擔民事賠償責任有關事項的規定) for public comments.
Article 220 of China’s Securities Law stipulates that, in violations of the Law, the defendant shall be subject to civil liability and administrative fines, penalties, and confiscation of illegal proceeds; priority shall be given to civil compensation if the defendant’s assets are insufficient to satisfy both.
However, in judicial practice, the decision of administrative penalty of a case is often reached prior to the civil rulings. In some cases involving administrative penalties, especially with a large number of fines, the defendant is usually left with insufficient money to pay the civil compensation after paying the requested fines.
The Regulation aims to ensure that aggrieved investors can have compensation in preference to administrative penalties.
Cover Photo by David Veksler on Unsplash
Contributors: CJO Staff Contributors Team
