Lecture Notes in Education Psychology and Public Media

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Lecture Notes in Education Psychology and Public Media

Vol. 53, 06 June 2024


Open Access | Article

Standards for Determining Materiality in Securities Misrepresentations and Suggestions for Improving Price Sensitivity Standards

Hongxiang Wang * 1
1 Hainan Normal University

* Author to whom correspondence should be addressed.

Lecture Notes in Education Psychology and Public Media, Vol. 53, 150-158
Published 06 June 2024. © 2023 The Author(s). Published by EWA Publishing
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Citation Hongxiang Wang. Standards for Determining Materiality in Securities Misrepresentations and Suggestions for Improving Price Sensitivity Standards. LNEP (2024) Vol. 53: 150-158. DOI: 10.54254/2753-7048/53/20240057.

Abstract

With the development of the securities market, cases of false statements are increasing day by day. Since the criteria for determining "materiality" have not yet been unified, there are disputes in academia and judicial practice. These controversies primarily revolve around three theoretical approaches: monism, which focuses solely on price sensitivity; dualism, which considers both price sensitivity and investment sensitivity; and ternary theory, which introduces additional criteria. This paper undertakes a comprehensive analysis of international standards for determining "materiality" and suggests that China should not only emphasize price-sensitive criteria but also incorporate investment-sensitive assessments to adequately reflect the complexities of modern financial markets. The paper also critiques the reliance on the price sensitivity standard as overly simplistic and potentially insufficient for capturing the full impact of false statements on market behavior. To address these shortcomings, the paper advocates for the involvement of professional institutions to independently verify the impact of false statements on stock prices, thereby ensuring more objective and reliable assessments. Furthermore, it is recommended that the burden of proof be shifted more heavily onto defendants in securities litigation, requiring them to substantiate their claims more rigorously.

Keywords

Securities misrepresentation, materiality, extraterritorial materiality determination standards, price sensitivity standards

References

1. Li Junlin“Exploration on the Materiality Standard of information Disclosure in the Securities Market,Special Zone Economy ,No.11,2007.

2. Civil Ruling No. (2020) Supreme People's Court Civil Appeal 3556

3. Civil Judgment No. (2020) Qianminzhong 855 of the Guizhou Provincial Higher People's Court

4. Civil Judgment No. (2019) Qian 01 Minchu 2066 of the Guiyang Intermediate People's Court of Guizhou Province

5. Tang Xin, Zhang Ranran. It is advisable to conduct a detailed review of the "materiality” of information disclosure in civil litigation involving false statements[J]. Securities Law Court, 2020, 28(1): 254-265.

6. Li Youxing, Xu Pengjiong. Discussion on the Standard of Materiality of Inside Information[J]. Journal of Zhejiang University (Humanities and Social Sciences), 2017(3): 175.

7. Civil Ruling No. (2020) Supreme People's Court of the People's Republic of China

8. Civil Judgment No. (2016) Ji 01 Min Chu 352 of the Shijiazhuang Intermediate People's Court of Hebei Province

9. Qian Lieyang and Chang Xiao: "Correcting the Perspective of Information Materiality Determination: A Comparative Study between China and the United States", Tsinghua Financial Review, No. 7, 2022.

10. Chen Yong: On the "Materiality" Standard in the Securities Information Disclosure System, Times Finance, No. 4, 2015, Late Issue

11. Bing Li v.Aeterna Zentaris, Imc, 324 F.R.D.331 (D.N.J.2018)

Data Availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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Volume Title
Proceedings of the 3rd International Conference on International Law and Legal Policy
ISBN (Print)
978-1-83558-415-6
ISBN (Online)
978-1-83558-416-3
Published Date
06 June 2024
Series
Lecture Notes in Education Psychology and Public Media
ISSN (Print)
2753-7048
ISSN (Online)
2753-7056
DOI
10.54254/2753-7048/53/20240057
Copyright
06 June 2024
Open Access
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Copyright © 2023 EWA Publishing. Unless Otherwise Stated