Courts nationwide to increase penalties for financial crimes

Chinese courts have pledged to work with securities regulators to step up the crackdown on financial crimes such as fraudulent issuance and illegal information disclosure, aiming to better protect investors' legitimate rights and interests.

The crackdown measures are outlined in a 23-article guideline jointly released on Thursday by the Supreme People's Court and the China Securities Regulatory Commission. The document is intended to strengthen securities supervision and improve the efficiency of case handling.

"This is a foundational framework for advancing the reform and development of the capital market in the new era, while also marking a significant achievement in the legal construction of China's capital market," the top court said.

Courts nationwide are being urged to take a tougher stance on financial offenses, particularly fraudulent issuance and the illegal disclosure of financial data. Individuals who plan, organize or carry out such misconduct will face harsh punishment, according to the court.

The guideline also calls for closer coordination between regulators and courts, with regulatory agencies required to strengthen routine supervision and share financial risk information with judges in a timely manner.

To make it easier for investors to safeguard their rights, courts are required to reduce litigation costs and provide more online services, including case filing, evidence exchange, mediation and hearings.

"Judges must ensure that disputes can be resolved more efficiently through digital platforms," the court said.

While emphasizing the protection of investors, the document also seeks to regulate the behavior of securities, futures and fund management institutions, which are deemed vital to the capital market's stability.

In shareholder disputes involving those institutions, courts are instructed to scrutinize equity and control structures. If irregularities such as circular or false capital contributions, capital withdrawals or improper equity management are found, judges should notify regulators and may suspend proceedings until the relevant regulatory actions are completed.

To support China's high-level opening-up and improve the legal environment for foreign investors, the guideline also proposes drafting documents on the extraterritorial application of capital market laws, helping unify judicial standards in international securities and futures disputes.

It also calls for stronger international judicial cooperation — including cross-border evidence collection and document delivery — to reduce the burden and cost of rights protection for both domestic and overseas investors.

"We will join hands with the China Securities Regulatory Commission to strengthen the institutional foundation of the capital market through rule of law," the court said. "We are committed to enhancing coordination between the judiciary and regulators, streamlining enforcement practices and providing strong legal support for market reform and development."

The joint effort is part of China's broader goal to build a resilient financial sector and promote national modernization, it said.

In recent years, China has increasingly emphasized the role of law in financial governance. To more effectively address misconduct in the sector, the top court has issued several judicial interpretations and documents on topics such as bond disputes, the bankruptcy reorganization of listed companies, and the reform of the registration-based initial public offering system.

caoyin@chinadaily.com.cn