Liability Determination of Financial Institutions’ Breach of Suitability Obligations

Take the Obligation to Inform and Explain as an Example

DOI

10.2991/aebmr.k.220307.462How to use a DOI?

Keywords

Financial institutions; Suitability obligation; Liability determination; Obligation to inform and explain; Judicial adjudication

Abstract

The Suitability Obligation is an essential legal institution in the financial market to protect investors. The Minutes of the National Court Work Conference for Civil and Commercial Trials in 2019 (“The Minutes”) has made detailed provisions on the liability determination of financial institutions for violating suitability obligations. However, some of the provisions in “The Minutes” still have a large room for discretion. Different courts hold different opinions in judgments, and scholars also have different attitudes, especially related to the obligation to inform and explain (“the obligation”), one of three criteria for judging the performance of the Suitability Obligation. Basing on the analysis of relevant cases from 2016 to 2021, and combined with the comparative study of laws in different countries, this paper takes “the obligation” as the starting point, and analyzes relevant issues about the liability determination of financial institutions’ breach of Suitability Obligations. During the research process, the author found the loopholes of the current provisions and the significance of cases. Furthermore, the author puts forward suggestions to improve the measurement standards to effectively promote the unification of the judging rules. These suggestions can improve the litigation mechanism to protect investors, and ultimately promote the construction of a healthy financial market.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Jingxuan Yang
PY  - 2022
DA  - 2022/03/26
TI  - Liability Determination of Financial Institutions’ Breach of Suitability Obligations
BT  - Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)
PB  - Atlantis Press
SP  - 2851
EP  - 2854
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220307.462
DO  - 10.2991/aebmr.k.220307.462
ID  - Yang2022
ER  -