Reforming China’s Securities Civil Actions : Lessons from US’s PSLRA Reform and Taiwan’s Government Sanctioned Non-Profit Organization

In this paper, we analyze the different civil enforcement regimes of China, US and Taiwan to answer how China should reform her securities civil actions. Drawing on the latest scholarships and empirical studies, we examine the inadequacies of the US class actions in achieving the goals of deterrence and compensation and the implementation of PSLRA reform. The surprise finding on the active role by public institutional investors but passive role by private institutional investors is highlighted. Recognizing that efficiency of private attorney does not equate to efficiency of public good production and the importance of institutions motivated by public interest in class actions, we discuss the Taiwan's utilization of government sanctioned NPO to supplement public and private enforcement. Indeed, we argue that due to China's limited legal infrastructure and political-social considerations, the Taiwan's model with improvement in transparency and independence is more suitable for China's reform need at this present stage