Li Jian: The Pathways for Securities Rights Protection Are Expanding, but Claims Related to Delisting Still Face the "Six Difficulties"

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Special Topic: Strengthening the Protection of Small and Medium Investors’ Rights—Sina Finance 3.15 Investor Protection Forum

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On March 13, the Sina Finance 3.15 Investor Protection Forum was held, featuring a keynote speech by Li Jian, Deputy Director of Zhejiang Yufeng Law Firm and Director of the China Securities Law Society.

Drawing on over 20 years of practical experience representing more than 130 listed company shareholders in claims and winning cases, Li Jian analyzed the highlights and difficulties of current investor claims, especially as the new judicial interpretation on false statements has been in effect for four years. He also proposed specific suggestions to optimize the rights protection mechanism, providing practical references for investor protection in the capital market.

Li Jian pointed out that the institutional benefits in the investor claim field are continuously being released, and the pathways for rights protection are expanding, showing four main highlights. First, after the removal of pre-claim procedures, successful claims without administrative penalties continue to emerge. In 2022, the new judicial interpretation eliminated the thresholds for administrative penalties and criminal judgments. According to incomplete statistics, in recent years, nearly 20 listed companies such as Super Communication (rights protection) and Tiansheng Pharmaceutical have been sued and won by investors without being penalized by the CSRC. In Li Jian’s case involving Zhonglai Co., Ltd., investors sued based on a CSRC warning letter and received compensation in 2025, demonstrating judicial support for investors’ legitimate rights.

Second, the judicial direction of “pursuing the primary wrongdoer and punishing accomplices” is becoming clearer. In May 2025, the Supreme Court and the CSRC jointly issued a document clarifying this principle, marking the formation of a full-chain judicial accountability loop for financial fraud. In September of the same year, the Shanghai High Court upheld the first-instance verdict in the Huahong Jitong case, holding not only the listed company and senior executives accountable but also assigning joint liability of 10%-20% to three unrelated third parties—suppliers and customers—who cooperated in the fraud, setting a benchmark case in judicial practice.

Third, the first case of claiming damages for breaching public commitments has been settled, establishing a red line for truthful information disclosure. In the first nationwide case judged by the Shanghai Financial Court involving senior management’s failure to fulfill shareholding increase commitments, the court found that the executives’ failure to honor their public commitments undermined market confidence and required compensation, issuing a judicial warning against “breaking promises” and clarifying the legal binding force of information disclosure.

Fourth, misleading statements such as “riding the hot topic” and “炒概念” (speculating on concepts) are being precisely targeted, with an increase in related claims. Under the registration system, the accuracy of information disclosure is crucial. “Riding the hot topic” essentially involves false statements that mislead investors. Yabao Chemical was penalized for riding the COVID-19 pandemic hot topic, and Li Jian represented investors to win the claim; recently, companies like Longbai Technology and Sunflower (rights protection) have been warned or filed cases for suspected misleading statements, potentially facing numerous investor claims in the future.

While recognizing these highlights, Li Jian also addressed three major difficulties in current investor rights protection. First, the trial process for exemplary cases is lengthy, and parallel cases progress slowly. First and second trials of exemplary cases often take two to three years, during which many parallel cases are delayed, leaving some investors facing delisting or asset transfers, weakening their sense of rights protection. Second, claims against delisted companies face “six difficulties”: issues in filing, court hearings, enforcement, etc. In the Dalian Holdings case, over a thousand investors’ claims took eight years without enforcement, highlighting the insufficient compensation capacity of delisted companies and the imperfect mechanisms. Third, claims related to insider trading and market manipulation remain a shortcoming; due to the lack of core rules on jurisdiction and causality, even if perpetrators are penalized, investors find it difficult to recover damages through civil litigation, with few successful cases.

In response to these issues, Li Jian proposed three practical suggestions. First, optimize the trial process for exemplary cases by shortening court procedures and establishing rapid trial mechanisms for parallel cases, leveraging extensive judicial experience to explore quick mediation and rulings. Second, strengthen the functions and resource support of insurance institutions, encouraging their active participation in representative litigation of delisted and major difficult cases, improving case screening transparency, and guiding through the “national team.” Third, accelerate the implementation of civil compensation mechanisms for insider trading and market manipulation, hoping the Supreme Court will issue relevant judicial interpretations soon to clarify core rules. Currently, the Supreme Court has drafted a judicial interpretation and judicial advice, aiming for issuance within the year.

Li Jian stated that over the past four years, rules for investor protection in the capital market have been continuously improved, and judicial standards have steadily risen. However, the work of protecting investors remains arduous. Only by continuously filling institutional gaps can we better safeguard the legitimate rights of small and medium investors and promote high-quality development of the capital market.

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Editor: Chang Fuqiang