China will undergo historic reform by allowing individual investors the right to class action lawsuits in cases such as fraud and price manipulation following a series of scandals.
China’s supreme court green-lighted the new rule which will provide recourse for the nation’s individual investors, the world’s largest group at about 160 million.
According to the China Securities Regulatory Commission (CSRC), class action is «of great significance» to investor protection alongside capital market improvements and health. The CSRC will target cases that are large and have negative social impact.
More Tightening
The new rules mark yet another move by Chinese regulators further tightening following a series of scandals including inflated sales figures at Luckin Coffee and gilded copper passed as gold at Kingold.
Last month, regulators once again signaled a commitment to crack down on misconduct by issuing a record-high fine of 3.6 billion yuan ($520 million) over insider trading charges against Shanghainese entrepreneur and his daughter Wang Yaoyuan and Wang Chengcheng.
