Washington International Law Journal


Guiping Lu


On January 9, 2003, China's Supreme People's Court issued a new ruling with detailed provisions governing private securities litigation involving disclosure of false or misleading information. The new ruling is expected to play an important role in regulating and developing China's securities markets by providing a necessary judicial safeguard against infringement upon investors' interests. The new ruling, however, is unlikely to achieve its expected effect due to various procedural and substantive hurdles to investor access to judicial recourse. The built-in procedural hurdles either make it very difficult for securities investors to bring private actions, or, in some circumstances, deprive them of any possibility of recovery. Such procedural hurdles are reflected in provisions relating to standing, jurisdiction, prerequisites to private actions, and class actions. In addition, causation provisions of the new ruling present a substantive hurdle to investors' civil remedies and may, in effect, prevent investors who sell securities on the basis of a false representation from recovery. This Comment concludes that China's Supreme People's Court needs to remove the procedural and substantive hurdles if it wishes to provide necessary judicial protection for the interests of securities investors.

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