[Keywords]

civil, listed company, information disclosure, amount of compensations

[Case summary]

Chen X, the Plaintiff, purchased the stocks of XX Company, the Defendant, at Shenzhen Stock Exchange. As XX Company was punished by CSRC Hainan Supervision Bureau for failing to publish its business revenues and profits according to the rules, Chen X, on the grounds of XX Company having made misrepresentation resulting in economic losses to him, and Yuan Xx (chairman & general manager, legal representative), Wang Xx (deputy general manager, company secretary, securities business representative), Fu Xx (financial manager), XX Accounting Firm being directly involved in the misrepresentation, requested that XX Company, Yuan Xx, Wang Xx, Fu Xx and XX Accounting Firm bear the compensation liabilities. The court, based on the course of the relevant stocks, the stock exchange indices and industrial indices, analyzed the changes of trading volume and stock price after the date of execution and the date of correction, evaluated whether the misrepresentation involved was of grave severity, whether there was any causal relationship between the investor’s loss and the misrepresentation, and whether there was any nonsystematic risk, and supported partly the investor’s request for compensation from the listed company. And the joint compensation liabilities of the listed company’s legal representative, company secretary and financial manager were processed according to the rule of “liability suits fault.Listed companies must disclose by law their information in a truthful, accurate and integral fashion, and may not make false record, misleading representation or major omission. Listed companies failing to disclose by law critical data, or making false record, misleading representation or major omission, if any investor suffers losses in securities transactions, shall bear the relevant civil compensation liabilities. This case was so handled that it serves as a lesson and warning to listed companies, further optimizes the investment environment of the securities market, safeguards the order of the capital market, and protects the legitimate rights and interests of small and medium investors.

[Verdict:]

The first-instance court ordered XX Company, Defendant, compensate 26,000.86 yuan to Chen X; Yuan Xx, Defendant, undertake joint compensation liabilities to XX Company; Fu Xx and Wang Xx undertake joint compensation liabilities within 20% and 5%, respectively, in XX Company’s liabilities; and rejected Chen X’s other requests. After the judgment was announced, Chen X and XX Company, Yuan Xx, Wang Xx, Fu Xx all refused it, and appealed. The second-instant court rejected the appeals, and sustained the original judgement.

[Significance]