A Dual-Dimensional Analysis and Tripartite Model of Joint and Several Liability vs. Proportional Liability in Securities Misrepresentation Cases

Abstract

In securities markets with high information obliquity and numerous securities traders, mutiple mass tort actions routinely arise, bringing complex infringers, interlocking behavior, and inscrutable chains of causation into play—thus creating significant challenges for liability determination. While the joint and several liability and liability by shares systems have been set out in the Chinese Civil Code and Securities Law respectively, problems such as the vagueness of the standards and the inconsistency of the court practice still exist, which can severely telescope the fairness and operability of the system. Some attention is paid to the mechanics of liability for mass tort claims in the securities industry. This article examines the practical issues and limitations associated with joint and several liability versus proportional liability in practice cases. It puts forward a modified body of system of liability as “causal link + subjective link” and quantitative model of “behaviour-fault-gain” within a tri- dimension. Based on institutional experiences in the U.S. and Germany in connection with liability typology and proportional liability assessment mechanisms, this project examines whether and how liability typology and proportional liability assessment mechanisms are possible. Its purpose is to supply a theoretical underpinning and practical guidance for the improvement of the liability rules in China securities market's mass tort.