The largest court hearing in the Foshan Lighting case
On March 6, 2013, Foshan Lighting announced that it had received an administrative penalty decision from the Guangdong Supervision Bureau of the China Securities Regulatory Commission. The company and relevant executives were fined 400,000 yuan and other administrative penalties by the Guangdong Supervision Bureau of the China Securities Regulatory Commission due to illegal information disclosure. The penalty letter shows that the illegal facts involving false statements by the company mainly include illegal information disclosure in regular reports and temporary reports in 2010 and 2011, mainly including the failure to disclose loans and guarantees from affiliated companies in accordance with the law, and related transactions exceeding 100 million yuan in two years each, which were not disclosed in accordance with the law.
With the announcement of the China Securities Regulatory Commission’s penalty decision, Foshan Lighting’s collection of claims for false statements has also begun across the country. According to the company’s announcement on rights protection cases disclosed in May 2014, 1,303 investors across the country have filed lawsuits in court, claiming more than 180 million yuan. The reporter learned from a number of well-known securities rights lawyers that the number of investors sued actually exceeds the company's announcement. “Because what the company disclosed has already received feedback from the court, more investors are on the way to sue, or the prosecution information has not yet been fed back to the company.” A lawyer told reporters.
After a lengthy battle over jurisdictional objections and court scheduling, investors finally faced the first court hearing of the case on July 9, 2014. In the first trial of the case, a total of two attorneys for the plaintiff attended the trial. 515 investors were represented, and the claim amount exceeded 70 million. After the trial of the case, no result has been released so far. On Monday, more than a month later, the case finally went to court for the second time. This court session heard the lawsuits of 476 investors represented by more than 20 lawyers.
More than 20 attorneys packed the plaintiff's table
Although the number and amount of represented investors in the second trial were relatively small compared to the first trial, the scale of the trial was larger. More than 20 lawyers from Shanghai, Beijing, Hangzhou, Guangzhou, Shenzhen, Hebei and other places gathered in the overcrowded hall. Not only did they fill the plaintiff's seat in the Third Courtroom, one of the largest courts of the Guangzhou Intermediate People's Court, there were also several attorneys and several investors who had witnessed the trial to defend themselves. They had no choice but to sit in the auditorium to participate in the trial. There were a large number of plaintiffs sitting, and relevant court staff spent a lot of time preparing for the trial. The trial, which was originally scheduled to start at 9:00 a.m., did not officially start until 9:30 a.m.
A human rights lawyer revealed to reporters that such court hearings are very rare. It is rare to see such a large number of plaintiff lawyers in ordinary civil cases, and it is rare for securities rights protection cases over the years to be like the Foshan Lighting case, which basically brought together all the well-known securities rights protection lawyers in the country, making it almost a "grand event".
In addition, many investors and media people came to attend the court hearing, and they paid close attention to the progress of the case as observers.
Compared with the first court hearing where the two sides exchanged words and debated legal issues related to the case, the second court hearing was also full of interesting tidbits due to the larger number of people. During the trial, the courtroom burst into laughter twice, and speeches by a human rights lawyer and an investor drew applause from the audience, prompting the presiding judge to emphasize court discipline.
Compared with the strong attitude of Foshan Lighting Company’s attorney during the first trial, during the second trial, the plaintiff and defendant lost some of the tense and sharp atmosphere. Lawyers from both sides even joked when checking the details of compensation, causing everyone to laugh.
Foshan Lighting still does not take responsibility and does not reconcile
Yesterday's court session, the plaintiff and the defendant debated around three points of dispute: 1. Whether the defendant constituted a securities misrepresentation; 2. Did the plaintiff's loss and the defendant's misrepresentation constitute a causal relationship? 3. If the defendant makes a false statement, is there a systemic risk? Does it need to deduct factors such as systemic risk, industry risk, and company operating risk?
Consistent with the tone used in the first court hearing, Foshan Lighting’s attorney still insisted that the company did not constitute a false statement in the securities market and did not need to bear responsibility. The reason is that the company's violations do not constitute a "major event" stipulated in relevant laws, but are only related transactions. Its attorney also stated that even if the company made false statements, its actions had no causal relationship with investors' losses. It believes that systemic risk is the only reason for investor losses, and that the European debt crisis, China's economic crisis, industry risks, company fundamentals, etc. are all reasons for the decline in stock prices.
In this regard, Lawyer Liu Guohua, one of the plaintiff’s attorneys and director of Guangdong Benben Law Firm, said that the China Securities Regulatory Commission Guangdong Supervision Bureau’s Administrative Penalty Decision No. 2013 (1) has already given a conclusion on whether it constitutes a false statement. According to legal provisions, the plaintiff's losses that meet the conditions for claiming are causally related to the defendant's misrepresentation, and the defendant shall be liable for compensation. The defendant blamed all the decline in Foshan Lighting's stock price on the so-called systemic risks, industry risks, and operating risks. However, it only submitted some news reports and K-line charts of market indexes, industry indexes, and other individual stocks as evidence, and did not produce the originals. The plaintiff has doubts about the authenticity of the evidence submitted by the defendant. Moreover, the plaintiff bought Foshan Lighting stocks, not the market index or other stocks; the trend of Foshan Lighting stocks was obviously inconsistent with the trend of the market index.
Regarding the above views, other attorneys at the scene and the investors they represented basically agreed, and only added some details. At the end of the trial, the judge asked both parties whether they agreed to settle. Most of the plaintiff's attorneys expressed their willingness to settle, while some attorneys and shareholders who went to court in person expressed the hope that the court would pronounce a verdict as soon as possible.
Trial Highlights 1: Shareholders denounced the company in court without hiring a lawyer to argue in person
Compared to the debate between the original and defendant’s professional attorneys, the speech of an investor sitting in the gallery who did not hire a lawyer and sued on his own behalf attracted more attention. When it was his turn to speak during the trial's arguments, the investor stood up from his seat and lambasted the company.
Different from the legal views of professional lawyers, this investor’s speech expressed his views from a more life-like and simpler perspective. Regarding the view expressed by Foshan Lighting Company that the losses of shareholders were due to systemic risks, he started with an analogy to refute: "If public security in Guangzhou is not good, I was stabbed at the train station. Can the perpetrator be exempted from liability on this basis?" He expressed the hope that the court would be upright and impartial, make a punitive judgment against Foshan Lighting Company, set a benchmark, act as a deterrent to other listed companies that commit fraud, and provide justice to investors.
Because the investor’s voice was loud and emotional, his speech aroused a lot of applause from the audience.
Trial Highlights 2: Shareholders filed additional lawsuits demanding that the company publicly apologize for one week
Of the 476 investor rights protection cases heard this time, all of them requested financial compensation from Foshan Lighting Company. However, an investor's attorney was present to file additional lawsuits. The investor demanded not only financial compensation from Foshan Lighting, but also a week-long public apology for its deliberate delay.
Xie Liang, the attorney who filed the additional lawsuit, told the "Investment Express" reporter that according to Article 15 of the Tort Liability Law of the People's Republic of China, "The main ways to bear tort liability are:... (6) Compensation for losses; (7) Apology;... The above ways of bearing tort liability can be applied individually or in combination." In view of the fact that the defendant's false statements in this case violated the plaintiff's legal rights and caused the plaintiff huge losses, the defendant should apologize to the plaintiff.
Lawyer Xie Liang said that the defendant company used litigation techniques to cause the case to take too long. "Delayed justice is not justice." He requested Foshan Lighting Company to issue a public apology in well-known mass media for a week.
Regarding such unexpected litigation claims, Foshan Lighting Company’s attorney stated that due to the special demands, a separate case should be handled.
In fact, another investor represented by lawyer Xie Liang also submitted a written application to the judge, requesting that the case be decided within one month. He said that it has been one year and three months since the case was filed, and there is no point in continuing to wait. Since the loss is clear and the case is simple, he hopes the court can make a judgment within one month after the trial.
Regarding such a request, a securities rights lawyer said that the court's hearing and judgment must comply with relevant procedural law provisions, but it is understandable that investors are anxiously waiting.
Highlights of the trial three: The lawyer read out "A Letter from Shareholders to Foshan Lighting Company" in court and received applause
Lawyer Xie Liang, who spoke at the end of the trial, also brought a "Letter from Shareholders to Foshan Lighting Company" specially authorized by the investor he represented. The following is an excerpt from the letter excerpted by the reporter:
"What the shareholders ask for is that the defendants can give them an explanation in a responsible manner, and don't say that their losses have nothing to do with you! Otherwise, I don't know how society will re-evaluate your credibility, and I don't know how you will reshape the corporate image.
Today , the reason why they took up legal weapons to defend their rights is because they were not able to obtain the compensation they deserve without going through lengthy litigation like the unfortunate and lucky shareholders of Wanfu Biotech and Hailianxun. They had invested all their trust and a lot of capital and time in you. They hoped that you, who were known as "cash cows", could bring good luck, but in the end, what happened to them was scams and disasters!
They hope that such rights protection actions prove that investors are not lambs who swallow their anger and are slaughtered, and that the stock market is not a casino where fraud is rampant and there are no rules! For the sake of rights and justice, they are willing to go to court to defend their rights to the end! What they safeguard is not only their own legal rights, but also the normal order of the stock market and the foundation of social credit. What they safeguard is fairness, justice and moral conscience. What they safeguard is the trust in the law and the belief in the rule of law!
They hope that China’s laws will be more perfect and the judiciary more fair, so that, as President Xi Jinping said, “let the people feel fairness and justice in every judicial case”! ! At this moment, when the Fourth Plenary Session of the 18th Central Committee of the Communist Party of China is about to be held, when governing the country according to law may become the main theme of this society, their participation may be a case with historical turning point! ! This case may be the beginning of a more just administration of justice, rather than a continuation of regression.
Finally, they sincerely hope that the handling of this case can return to the starting point, return to the classic cases with epoch-making historical significance that were decided when the Securities Judicial Interpretation was released many years ago, return to the framework of the Supreme People's Court's gazette case - the Daqing Lianyi case, and accurately identify the concept of systemic risk, its burden of proof, standards of proof and other major issues related to this case. "
Such a letter seemed to express the sentiments of many investors. After reading it, the court burst into applause again, causing the presiding judge to emphasize court discipline.
Trial Highlights 4: Fo Zhao's lawyer said compensation should not be "killed and divided."
After experiencing the court hearing speeches by the above-mentioned rights lawyers and stock investors, the atmosphere seemed to be one-sided on the side of investors. In this regard, Foshan Lighting Company's attorney stated that requiring the company to compensate is a legal request, but it is not a campaign to "attack local tyrants and divide their land." The lawyer believes that Foshan Lighting Company was previously called a "cash cow" and now that people are demanding compensation, the fundamentals cannot be shaken. "Just divide the milk, don't kill the cow and divide the meat." If the cows no longer exist, everything will cease to exist, which is unfair to new investors.
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