· Area of Law： Government Affairs

· Level of Authority： Local Judicial Documents

· Date issued：06-25-2018

· Effective Date：06-25-2018

· Issuing Authority： Higher People's Court of Shanghai Municipality

· Status： Effective

Implementation Opinions of the Higher People's Court of Shanghai on Implementing the Prevention of Financial Risks
(June 25, 2018)
For the purposes of conscientiously implementing the spirit of the 19th CPC National Congress, the Central Economic Work Conference, and the National Financial Work Conference and the work requirements of the Shanghai Municipal Party Committee and the Supreme People's Court for prevention of financial risks and leveraging the function and role of people's courts in preventing and defusing financial risks, the Higher People's Court of Shanghai, in conjunction with the actual work of the courts in Shanghai, developed the Implementation Opinions of the Higher People's Court of Shanghai on Implementing the Prevention of Financial Risks (officially issued on June 25, 2018).
I. Profoundly understanding of the extreme importance and urgency of preventing financial risks
Preventing financial risks is an important measure to implement the National Financial Strategy:
General Secretary Xi Jinping pointed out: "Finance is an important core competitiveness of the country," "financial security is an integral part of national security," "it is an eternal theme of financial work to prevent systemic financial risks, and active prevention and defusing of systematic financial risks shall be placed in a more important position." Preventing and defusing financial risks is relevant to national security, overall development, and people's property security, major insurance that China must have to achieve quality development, and is of great and far-reaching significance for China's implementation of the Financial Strategy.
Preventing financial risks is an urgent need of Shanghai accelerating the advancement of the construction of an international financial center:
Shanghai is an important international financial center determined by the Central Government. The Shanghai Municipal Party Committee and Municipal Government issued the Implementation Opinions on Effectively Conducting the Financial Work in Shanghai in the New Era and Accelerating the Construction of International Financial Center, clearly stating: “The bottom line thinking shall be adhered to, financial services for the real economy and supply of quality and efficient services shall be the fundamental principle, a risk advance warning, prevention, and defusing system shall be established and improved, and hidden risks shall be disposed of promptly, so as to earnestly safeguard the vital interests of the people and social fairness and justice and promote the sound and stable financial operation." Hence, preventing financial risks is of great significance for Shanghai basically completing the construction of an international financial center by 2020 and an urgent need of Shanghai accelerating the advancement of the construction of an international financial center.
Preventing financial risks is an inevitable requirement for people's courts to fully play their functions and roles:
In August 2017, the Supreme People's Court issued the Several Opinions on Further Strengthening Financial Trials, consisting of 30 specific opinions on the exercise of trial power by courts according to the law, the promotion of financial services for the real economy, the effective prevention and defusing of financial risks, and the effective maintenance of financial security. People's courts shall closely focus on the three tasks of "serving the real economy, preventing and controlling financial risks, and deepening financial reforms", especially the task of preventing and controlling financial risks, actively and soundly conduct financial trial, earnestly safeguard national financial security, and prompt the positive interaction between economy and finance and their sound development.
II. Overall objectives
Xi Jinping Thought on Socialism with Chinese Characteristics in a New Era shall be taken as guidance, the decisions, arrangements, and work requirements of the CPC Central Committee, Municipal Party Committee, and the Supreme People's Court on preventing financial risks shall be conscientiously implemented, the awareness of politics, big picture, and responsibility shall be firmly developed, trial functions and roles shall be leveraged, the prevention and defusing of financial risks shall be taken as the theme, financial crimes shall be severely combated, financial innovation shall be reasonably guided and regulated according to the law, the enforcement in financial cases shall be tightened, trial functions shall be extended in judicial proposals, trial white papers, and other various forms, the cooperation and contact with industry regulation and other authorities shall be made close, the improvement of the building of diversified financial dispute resolution mechanisms shall be advanced, and the focus shall be on creating a good financial rule of law environment, so as to advance the sound and positive development of Shanghai's economy and finance and provide a solid and powerful judicial guarantee for the construction of Shanghai as an international financial center.
III. Specific measures
Comprehensively strengthening the trial of financial criminal cases:
Various financial criminal activities shall be strictly crack down on in accordance with the law. Illegal fund-raising, loan fraud, credit card fraud, negotiable instrument fraud, and other criminal cases disrupting and undermining the financial market order shall be tried in an effective and lawful manner, so as to maintain the security and stability of the financial market. In particular, in illegal fund-raising and other mass-related financial criminal cases, illicit property shall be actively recovered, and the rights and interests of victims shall be protected in a timely manner.
Lawfully and strictly punishing securities crimes: Cases of insider trading in securities or futures and trading by undisclosed information and those of manipulating securities or futures markets shall be tried in accordance with the law in order to maintain the order of capital markets, prevent and defuse the systematic risks for capital markets, and promote the sustained and sound development of capital markets.
Comprehensively strengthening the trial of financial and commercial cases:
The trial of financial debt cases shall be strengthened. The trial of financial debt cases involving banks, small-loan companies, financial leasing companies, commercial factoring companies, and asset management companies, among others, shall be strengthened so as to protect legal financial debts in accordance with the law. Lenders shall be strictly and lawfully restricted from charging excessive interest rates increasing the burden on borrowers, and the financing costs for the real economy shall be effectively reduced.
Financial dispute cases arising from innovative financial products shall be prudentially resolved. For innovative financial trading models contrary to financial regulatory requirements and regulatory spirit and for financial violations by covering financial risks, evading financial regulation, and institutional arbitrage in the name of financial innovations, their legal effects shall be denied in a timely manner, and their effects and the rights and obligations of all parties shall be determined by the actual legal relationships. Where illegal pooling of public deposits or fund-raising fraud in the name of financial innovation is criminally punishable, the offenders shall be handed over to the public security authorities in accordance with the law.
Civil compensation cases involving various trading venues shall be tried according to the law. The illegal and irregular trading activities carried out by various trading venues without permission or beyond the scope of business permits shall be denied legal effects in strict accordance with the prohibitive provisions of relevant laws and administrative regulations.
Further intensifying the enforcement in financial cases:
The protection of legal financial debts shall be tightened. If an application for property preservation or enforcement filed by a party is found in conformity with the law, timely measures for preservation or enforcement shall be taken to safeguard the lawful rights and interests of the party. Information means shall be leveraged, and through the information exchange with financial, immovable management authorities, and other agencies, the efforts to find and track the leads to the property of persons subject to enforcement shall be intensified, so as to ensure the full and timely realization of lawful debts and increase the efficiency of the realization of financial debts.
The punishment of illegal conduct such as interference with enforcement shall be tightened. The earmarked campaign for the resolution of "enforcement difficulties" shall be advanced in depth. Escape from financial debts shall be combated in accordance with the law, compulsory measures such as restricted outbound travel, restricted consumption, and judicial detention shall be taken as legally required against actors who conceal property and evade enforcement, and persons subject to enforcement shall be supervised to perform their obligations promptly.
Actively using the extended functions of trial:
A series of white papers and model cases relating to financial trial shall be conscientiously and effectively released. The form of sending judicial proposals, a series of white papers relating to financial trial, and model cases shall continue to be used to disclose financial trial data to the public, explain the adjudicative concept and adjudicative opinions of courts, reveal potential financial risks to the public, financial regulatory authorities, and financial industry, and propose and supervise the improvement of internal risk control mechanisms by financial institutions, and guide the sound and positive development of the financial market.
Strengthening the exchange and interaction with financial regulatory authorities and industry associations:
An information communication and exchange platform shall be built, and mutual visits, thematic exchange meetings, and other means shall be used to possess the latest trends in the regulation of the financial industry, circulate notice of the information on financial trials by courts and model cases, and achieve the organic connection between the adjudicative results of courts and the orientation of financial regulatory policies. The communication and exchange with financial industry associations shall be heightened, and regular symposiums and seminars shall be held, so as to explain adjudicative thinking of courts to the financial industry, enhance the expectations of adjudicative results, reveal hidden risks in financial innovation and financial products, and propose that financial institutions improve internal risk control mechanisms.
Improving the "big data" system for financial trial:
Modern technology such as big data, cloud computing, artificial intelligence shall be leveraged to improve the Shanghai court "big data" system for financial trial and further strengthen the data collection label and data analysis functions, so as to provide relevant information support for accurately judging the trends in financial cases, research and resolve general and representative issues on the application of law in financial cases and preventing, issuing advance warning of, and making major decisions on regional, industrial, and systemic financial risks.
Advancing the building of diversified financial dispute resolution mechanisms:
The cooperation with financial regulatory authorities, financial industry associations, and investor protection institutions in Shanghai shall be further reinforced, the advantages of financial regulatory authorities, industry associations, and other institutions in financial expertise shall be capitalized on, and efforts shall be made to prevent and resolve financial disputes from the source.