http://dspace.cityu.edu.hk:80/handle/2031/721 2013-05-12T22:23:36Z 2013-05-12T22:23:36Z Xiong, Jun (熊雋) http://dspace.cityu.edu.hk:80/handle/2031/6280 2011-05-25T01:20:22Z 2010-01-01T00:00:00Z

Title: A study of private securities litigation against false corporate disclosure in the People's Republic of China Authors: Xiong, Jun (熊雋) Abstract: In the early 1990s, stock markets were introduced by the Chinese government to assist in the reform of poorly performing state-owned enterprises (SOEs) by providing SOEs a channel to raise capital from private individuals and by installing market discipline on SOE managers. The development of the stock markets since then has been phenomenal, albeit in the absence of an investor-friendly legal framework. In the late 1990s, the markets were riddled with exposures of corporate disclosure frauds in which the interests of millions of minority (individual) investors were infringed upon. Investors who fell victim to these scandals responded by bringing private securities litigation (hereafter as "PSL") suits. This study examines the emergence, development, existing problems and future trends of PSL in relation to false corporate disclosure in China. The study is primarily motivated by the observed narrow scope of the several prior studies and the lack of a systematic account of recent court practices in PSL. An updated study is needed in light of the recent progress in capital market and corporate reforms. The research aims to fill the gap that to date there has been little systematic assessment of PSL in China, in particular, concerning the practice of people's courts in handling PSL suits and a detailed comparison of the PSL rules in China with those in the U.S. from which the 2003 SPC Rule has heavily borrowed. Chapter 1 of the study provides an overview of the study. Chapter 2 of the study first examines the frequency and extent of false corporate disclosure in China, and then identifies several institutional reasons for the rampant disclosure frauds. It also explores the tension between minority investor protection and the traditional political ideology that commits to safeguarding state interests and maintaining state control. This tension is the key to understanding the development of PSL in China. Through a comparison of differences in the causes and effects of PSL in the U.S. and in China, the chapter concludes that minority investors are more vulnerable and winning PSL is more difficult for them in China than in the U.S. The differences and complications in China also suggest that the development of PSL might be a long and bumpy ride. In Chapter 3 I identify two independent but logically coherent theories on a country's choice of corporate rules with a selective adaptation approach. They are Bebchuk- Roe's theory on a country's choice of corporate rules and Potter's selective adaptation of international norms. Both theories propose three mutually consistent key elements that affect the selective adaptation including political ideology. I show that both frameworks can be treated as a unified analytical framework that is capable of explaining the emergence of PSL in China. Adopting this selective adaptation framework also enables me to develop a central argument in Chapter 4 that the lack of detailed rules supporting Article 63 of the Securities Law (1998) is not the main reason for people's courts' passive and reluctant attitude towards taking on and actively adjudicating PSL suits. After reviewing all the relevant laws and regulations governing false corporate disclosure in Chapter 4, the study finds that until the recent major revision of Company Law and Securities Law in 2005, Chinese laws and regulations have primarily relied on public enforcements (administrative sanctions and criminal penalties) to combat disclosure frauds. Nevertheless, Article 63 of the Securities Law (1998) does provide a legal basis for investors who suffered a loss as a result of disclosure frauds in securities issuance to seek civil remedies. Then what explained the three-stage emergence of the PSL in China (marked by the issuance of the 2003 SPC Rule)? Using the Bebchuk-Roe and Potter's theoretical framework on a country's selective adaptation of corporate rules, I find that (a) public-regarding judgments as to which rules would be most efficient, (b) the effect of interest group politics, and (c) culture and political ideology all played a role in the emergence of PSL in China. The latter two elements on "culture & ideology" and interest group politics thus means that the emergence of PSL in China is bound to be slow and gradual, which reflects a more complicated and dynamic selective adaptation process. While Article 63 created a high market demand for PSL, it did not result in a corresponding supply of PSL court service. I argue that understanding this disparity is central to understanding the key factors behind the emergence of PSL in China. After carefully analyzing the stages of the PSL development and people's courts changes in behaviors, I conclude that people's courts' passivity and reluctance in taking on PSL suits in the early stage of the PSL development (before 2002) is likely a strategic choice and a reflection of the tension between traditional political ideology and protecting private investors. In contrast, the commonly blamed lack of detailed operational rules does not appear to be the major reason. My analysis also reveals that legal reforms clearly lagged capital market developments in China and the emergence of PSL in China is also consistent with the "crash-then-law" argument. Chapter 5 provides an up-to-date assessment of the progress of PSL against corporate false disclosure in China following the implementation of the 2003 SPC Rule by analyzing court handling of three large-scale representative cases. I conclude that PSL in practice is far from being effective in China. The somewhat disappointing progress in "law in action" provides another test of the argument that Article 63 of the Securities Law (1998) was not enforced is not due to the lack of detailed supporting rules. Indeed, during the five years following the implementation of the detailed 2003 SPC Rule, courts still frequently refuse to follow the rule in taking on and trying PSL suits. The inherent tension between investor protection and socialist political ideology and local protectionism seem to play an important role. It also highlights the importance of supporting institutions and infrastructures to the enforcement of PSL rules. The 2003 SPC Rule was heavily influenced by the PSL in the U.S., for example, in terms of the adoption of the fraud-on-the-market theory. To help better understand and evaluate the 2003 SPC Rule, Chapter 6 provides an up-to-date review of PSL in the U.S. including the major governing statutory federal laws and their relevant antifraud provisions. My analysis of the PSL in the U.S. also highlights its problems and helps clear up some misconceptions that people tend to have about PSL in the U.S. The implication for China is that even in the U.S. that has comprehensive investor protection, defendant-friendly legal changes can still open the door for a new wave of securities frauds and PSL rules must be stringent. This chapter provides a benchmark for comparison in discussing the 2003 SPC Rule in Chapter 7 to help us understand how drafters of the PSL rule in China have selectively adapted the borrowed PSL rules to suit local cultural and ideological needs. Chapter 7 introduces and evaluates in detail the 2003 SPC Rule - the prevailing judicial regulation that governs the handling of PSL relating to false corporate disclosure. The rationale, pros and cons of each key article are analyzed by reference to people's courts' practice in trying PSL cases and the practice in the U.S. where appropriate. The 2003 SPC Rule's similarities to, and differences from, the U.S. PSL rules and judicial practice are analyzed using the powerful Bebchuk-Roe and Potter's selective adaptation frameworks. I find that the 2003 SPC Rule is laudable in many aspects of liberal borrowing of the U.S. practice, in particular, it has made a bold move in adopting the fraud-on-the-market theory despite the controversy about the market efficiency in China. The PSL rule drafters also have carefully adapted some U.S. rules to suit local circumstances. On the one hand, two aspects of the 2003 PSL Rule are more stringent than those in the U.S. (i.e., the strict liability of fraudulent company and its controlling shareholders in secondary market cases, and the liability of securities service professionals that act as aiders and abettors in secondary market cases). On the other hand, local regulatory culture of state control and political ideology of safeguarding state interests have found their way to modify PSL by introducing three "smart" ways that constitute major barriers for bringing PSL suits. These three barriers - the prerequisites to bringing a suit, jurisdictional requirements conducive to local protectionism, and the lack of an efficient form of litigation - ensure that PSL will not endanger the socialist ideology. How far PSL in China can move depends on the government's leeway in adapting its regulatory philosophy on state control and to what extent it is willing to balance state interests and private interests. My analysis also identifies some inconsistencies in articles regarding loss causation and the calculation of losses in relation to market systemic risk, which are not reported in prior studies. Finally, some preliminary suggestions are offered to solve the identified problems. China is well-known for its big difference between law on the books and law in action, as revealed by my case studies in Chapter 5. The implication is that law in action depends on supporting institutions and infrastructures. Indeed, rules can be transplanted, but supporting institutions and infrastructures are hard and must be home-grown. Chapter 8 focuses on judiciary that enforces law and infrastructures that help secure financial means for rendering relief to aggrieved investors. Both issues are important and crucially affect the enforcement of PSL rules. I analyze the weak judiciary in China that lacks independence, authority, and competence. The analysis also identifies the regional variations in local protectionism and competence of courts, suggesting that the behaviors of the local government and court and possibly the effect of judicial reform may vary according to the development level of the local economy. Two tentative measures are proposed to mitigate the adverse effect of courts' lack of independence and competence in adjudication before the full-blown judicial and political reforms are completed. One measure is to change the jurisdictional requirement in the 2003 SPC Rule and the other is to introduce the case precedent system by the SPC. Finally, the chapter, by reference to the latest developments and trend in the U.S., examines another supporting infrastructure of PSL - how financial means to provide sufficient compensation to defrauded investors can be secured via various insurance mechanisms, returning corporate and personal fines for shareholder remedies, and setting up a market-wide investor compensation fund. This study concludes in Chapter 9. The recent emergence and development of PSL in China and the issuance of the 2003 SPC Rule have been remarkable and of significance. The gradual emergence of PSL in China fits nicely Bebchuk-Roe and Potter's selective adaptation frameworks. Though the 2003 SPC Rule resembles the key features of the American PSL practice, it aims for different goals and will produce different results. While the government intends to provide a way for defrauded investors to seek economic relief, it maintains state interests through some procedural safeguards. Since the legal infrastructures (e.g., judiciary and mechanism securing financial means for providing compensation for investors) in China are still weak and will remain so in the foreseeable future, PSL in action is expected to exhibit some persistence with the old practice - i.e., law in action will be different from the law on the books. The ride of PSL in China is bound to be a long and bumpy one. I wrap up the thesis by discussing the limitations of PSL and the implications for investors. Notes: CityU Call Number: KNQ962 .X56 2010; xxiii, 475 leaves 30 cm.; Thesis (Ph.D.)--City University of Hong Kong, 2010.; Includes bibliographical references (leaves 456-475)

2010-01-01T00:00:00Z Wong, Yuet Alex (黄越) http://dspace.cityu.edu.hk:80/handle/2031/6279 2011-05-25T01:20:20Z 2010-01-01T00:00:00Z

Title: Developing an anti-money laundering regime and implementing anti-money laundering preventive measures in China : from the perspective of financial institutions Authors: Wong, Yuet Alex (黄越) Abstract: After China adopted its open-door policy in 1978, money laundering problems began to appear and soon proliferated. China first started its campaign against money laundering in 1989. Despite significant improvement in China's fight against money laundering over the last 20 years, research of this thesis indicated that China's AML regime was still inadequate when compared to international anti-money laundering (AML) standards. Also, financial institutions (FIs) in China currently encountered significant practical difficulties in implementing risk-based AML preventive measures in their daily operations. This research aimed, first, to investigate the areas of improvement that could be made, from the perspective of FIs, to China's AML regime so as to enhance its effectiveness, and second, to explore possible ways to enhance the implementation of existing risk-based AML preventive measures by FIs in China. With respect to the first part of the research, findings indicated that China's primary money laundering offence could be improved by extending the scope, applicability, predicate offences, mental and physical requirements, etc. Also, auxiliary money laundering offences, such as reporting and tipping-off offences, should be introduced into China's criminal law. Regarding current administrative and regulatory AML preventive measures imposed on FIs in China, this thesis called for more risk-based elements to be included, such as those related to customer due diligence and customer transaction monitoring. The research also indicated that China had yet to reach a stage at which it was able to adopt a full-blown risk-based approach to AML compliance. This thesis suggested that the proper approach to AML compliance in China was a mixed approach in which the rule- and risk-based AML preventive measures co-existed to retain the benefits of simplicity and certainty, enhancing the effectiveness of AML compliance. Regarding the second part of the research, in response to the practical difficulties currently encountered by FIs in China when implementing risk-based AML preventive measures, this thesis suggested a practical proposal to overcome such difficulties. The proposal included the following elements: practical and functional ways to identify AML risk factors and ultimate beneficial owners; ways to assess customers' money laundering risks and categorize them into different risk levels; ways to mitigate and manage customers' different money laundering risks; ways to conduct customer transaction monitoring; and ways to test internal compliance with AML programs. Due to the vast volume of transactions conducted each day by FIs, this thesis highlighted the importance of automation of transaction monitoring and suggested essential components that should be included in an effective automated transaction-monitoring model. As only minimal research on the above research areas existed, the author believed that the findings of this research present very practical applications that could contribute positively to the development of a more effective AML regime and to the implementation of AML preventive measures by FIs in China. Notes: CityU Call Number: KNQ966 .W66 2010; xiii, 308 leaves 30 cm.; Thesis (JSD)--City University of Hong Kong, 2010.; Includes bibliographical references (leaves 279-299)

2010-01-01T00:00:00Z Wang, Chao (王超) http://dspace.cityu.edu.hk:80/handle/2031/6278 2011-05-25T01:20:18Z 2009-01-01T00:00:00Z

Title: Trade remedies in regional trade arrangements : the practice, the law and beyond Authors: Wang, Chao (王超) Abstract: Against the background of economic globalization, today‟s world economy shows a number of characteristics, among which the continued proliferation of regionalism and the increasing use of trade remedies are two of the most significant ones. Importantly, within the WTO multilateral trading system, which is essentially established on the non-discrimination principle, regional trade agreements (RTAs) are allowed on condition that some requirements are satisfied in accord with GATT Article XXIV and the 1994 Understanding. However, the meanings of certain legal requirements are by no means clear and amenable to different interpretations. One example is that it is not clear with regard to the application of trade remedy measures in the RTA context, and in practice the choices have virtually been left to the individual WTO members. As a result, many and varied approaches are found in the hundreds of RTAs currently in force. This dissertation research provides a comprehensive and in-depth study of the complicated landscape of using trade remedies in RTAs: it intensively studies the contents of the trade remedy provisions in some 120 selected RTAs, provides a classification and abstract of the different types of these provisions, analyzes and evaluates the roles, effects, functioning, and other implications of those RTA-specific trade remedy provisions. In addition, it also conducts a legality examination of those innovative approaches in terms of their consistency with the relevant GATT/WTO provisions. Based on these studies, the desirable approaches for the use of trade remedies in the RTAs context, and the proposals for future reform to address the existing problems in light of promoting free and fair international trade are further discussed. Notes: CityU Call Number: K4600 .W36 2009; xiv, 358 leaves 30 cm.; Thesis (Ph.D.)--City University of Hong Kong, 2009.; Includes bibliographical references (leaves 340-355)

2009-01-01T00:00:00Z Lam, Sau Ping (林秀萍) http://dspace.cityu.edu.hk:80/handle/2031/6277 2011-05-25T01:20:15Z 2010-01-01T00:00:00Z

Title: Medical negligence in Hong Kong Authors: Lam, Sau Ping (林秀萍) Abstract: Medical negligence has begun an increasing concern recently. In Hong Kong, perhaps the awareness of medical negligence can be explained by the improved education of the general public as well as the increasingly easy accession to medical information. This relatively high degree of awareness inevitably leads to frequent challenges to doctors for their suspected malpractice. This is a striking contrast with the past perception of doctors, whom had been viewed as an elite group of academics with absolute power and knowledge. The rising numbers of tabloid newspapers and magazines like Oriental Daily and Next magazine which like to report medical blunders as attractive stories even increase such challenges. Of course, the increase in compensation after verdict from the court of appeal in 1996 contributes to the complaint culture of Hong Kong public as well. With the increasing medical blunders, our legal profession will inevitably involve in representing either party in court or, more commonly, giving medical-legal advice to the plaintiffs or defendants concerned. In order to prove medical negligence and claim for compensation, legal profession will have to refer to Tort Law, which forms the foundation for dealing with those issues. When this thesis points out that the three elements for proving medical negligence in a medical litigation should be duty of care, breach of duty and causation, it further points out that the Bolam and Bolitho tests should be considered as the cornerstone in relevant judgments. Through necessary investigations, this thesis further reveals that legal and medical professions in Hong Kong have not properly implemented those principles. This is especially a true case in Hong Kong because some of the Ordinance related to Health Care was made years before and amendments are needed to them in order to keep in pace with the rapidly changing society. As one of the methodologies apply in this thesis, interviews have been conducted in order to evaluate the different views on medical negligence in Hong Kong and to discover ways of improving the imperfect healthcare system. Both physicians and the public who have been interviewed believed that medical errors are one of the most serious problems in health care today. The issues cited most frequently by physicians were the costs of malpractice insurance and lawsuits. As for the public, however, the most frequently cited problems were the cost of health care in the private sector and the tremendously long waiting list for operations in public hospitals. That could a reason why the public cannot tolerate any medical error. Ultimately, the saying that prevention is better than cure is true for all problems. This wise statement not only applies to the medical profession, but also to legal profession alike. Even though medical negligence cannot be totally avoided by medical professionals, as legal advisers, we have the responsibility not only defend them but also to advice them the specific ways to minimize medical negligence. One of the contributions of this thesis is to offer many recommendations to doctors after analyzing in depth common causes of errors from cases of medical blunders in Hong Kong. Several of my recommendations are crucial because they could enable medical practitioners to minimize the chance of being complained or even sued for medical negligence. Notes: CityU Call Number: KNR110.45 .L35 2010; 318 leaves 30 cm.; Thesis (JSD)--City University of Hong Kong, 2010.; Includes bibliographical references (leaves 280-283)

2010-01-01T00:00:00Z