ABSTRACT
This chapter examines the procedural rules prescribed by the third circular of the Supreme People's Court (SPC), Several Provisions of the SPC on Hearing Civil Compensation Cases Arising from False Statement on the Securities Market, with a focus on the limitations of these rules. It explores the elements of false statement and liability under the Rules of the SPC. The chapter considers the limitations of the Rules of the SPC as they pertain to investor protection, the future development of China's securities market and market regulation. The stress on the role of judicial mediation by the Rules of the SPC may lead to abuses of the proceedings by some local people's courts in handling this type of cases. There are cases in which the parties have settled their disputes under encouragements from the judges and the cases have been withdrawn from the people's court.
