Abstract
The 2008 Global Financial Crisis had a major influence on the world, and financial derivatives were a primary cause of the crisis. As the name implies, financial derivatives are complex financial instruments derived from very difficult and specialized financial items. Due to the complexity and sophistication of financial derivatives, individual investors face a variety of risks, and it was precisely this diversity of risks that prompted the financial crisis. Financial institutions, as designers of financial derivatives products and contract drafters, have a wealth of experience and access to the most up-to-date information on financial derivatives. Financial institutions may violate their obligation to disclose information in this context by providing investors with inaccurate or inadequate information in order to maximize profits. Chinese scholars, on the other hand, have mostly researched the issue via the perspective of conduct regulation, with only a few examining it through the lens of private law.This dissertation uses this context as a jumping-off point for a comprehensive examination of the civil liability associated with misrepresentation in financial derivatives transactions from a consumer protection viewpoint. Contractual (including breach of contract and culpa in contrahendo) and tort liability are the most significant legal liabilities in the realm of financial derivatives. However, due to the complexity of financial derivatives contracts and the novelty of derivatives trading, establishing contractual and tort liability in view of derivatives trading is more or less problematic, making it difficult for financial consumers to get straightforward compensation. This is due to a deficiency in the legislation. This is due to the inadequacy of the legislation, the antagonistic attitude of the judiciary, and the limitations of conventional forms of civil liability.
Prof. Jinguang Xiong was well aware of the difficulty in establishing legal liability in financial derivatives transactions. In his book, he goes over the illegal acts in financial derivatives trading in detail, as well as the corresponding typical cases or news, and proposes the tort liability theory, which states that if there are illegal acts in financial derivatives trading, the victims should only ask for the financial institutions to bear the tort liability, and the courts should only apply tort liability. This is a novel theory, however this dissertation claims that Prof. Xiong's tort liability theory is not possible based on theoretical explanation. However, the case study revealed that applying contractual liability in the sphere of financial derivatives trading is really difficult, and tort liability appears to be a better option. As a result, this dissertation contends that, while Prof. Xiong's tort liability theory is unduly utopian and out of touch with Chinese judicial reality, it nevertheless has some merit, particularly in light of contractual liability's inherent shortcomings. Reinterpreting tort liability theory to combine tort liability with consumer protection regulations (e.g. punitive damages) to produce a new tort liability theory appears to be a more realistic approach, and this approach is also favorable to the financial derivatives market's healthy growth. This dissertation argues that in the field of financial derivatives trading, civil liability and consumer protection rules are inseparable as a whole, and that courts should consider both civil law, Consumer Protection Law, and relevant financial and securities market rules when applying the law, and that courts cannot strictly distinguish between public and private law. When implementing the legislation, the court shall consider civil law, consumer protection law, and associated financial market and securities market laws. The regulatory regulations should be considered while interpreting and assessing the unlawful activity indicated by misrepresentation, in order to better apply the norms of private law.
| Date of Award | 5 Jul 2022 |
|---|---|
| Original language | English |
| Awarding Institution |
|
| Supervisor | Minkang GU (Supervisor) & Chi Hin Peter CHAN (Supervisor) |