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Class-Action Litigation or Arbitration
Introduction

Taiwan’s securities and futures markets are dominated by individual investors who, nonetheless, are in an economically inferior position when they encounter any conflict against securities firms, futures companies, or securities issuers. Once their interests or rights are violated, they seldom pursue judicial procedures to protect themselves due to inadequate information, limited personal capability, high litigation cost, or other difficulties.

In fact, the investors who suffer losses due to the same securities case are usually more than one or two individuals, and their damage will not be compensated if the said investors do not pursue any legal procedure, and it will accordingly connive the wrongdoers from punishment. However, it takes time, energy, and considerable cost for investors to file litigation individually, let alone the troubles in case of inconsistency in the judgments made by different courts.

In this regard, class-action litigation is commonly exercised as a solution in the U.S. where victims of the same fraud case are allowed to seek for protection collectively. Other countries like the United Kingdom, Japan, and Korea have established specialized institutions or fund in charge of investor protection services.

In Taiwan, the Securities and Futures Investor Protection Act (hereinafter referred to as the “Act”) was announced as the legal source to ensure complete protection of investors. A class-action litigation mechanism and an investor protection fund have been established under the Act, which is made with reference of foreign practices and related consumer protection rules.

For any securities investment or futures trading fraud involved with 20 or more victims, SFIPC may file lawsuits or arbitration application under its name as an authorized representative of the victims in accordance with the Act and the SFIPC Charter, aimed at reducing total litigation cost and avoiding congestion of the court’s trial calendars.

In order to ensure efficiency of the class-action litigation mechanism, the Act allows the courts to waive collaterals for SFIPC-applied provisional seizure or provisional disposition. Meanwhile, the court fee charged for any SFIPC-filed lawsuit or appeal to a higher court is limited within the level for an award of NT$30 million. In addition, SFIPC is also exempted from the execution fee for mandatory executive procedures.

If SFIPC expresses the possibility that investors might suffer a loss beyond its capability to cover or calculate due to the non-execution prior to the announcement of the court’s judgment, the court should allow the application of provisional execution without asking collaterals. Meanwhile, in order to minimize the difficulties for SFIPC to gather necessary information, the Act allows SFIPC to request related institutions to provide necessary assistance or documents for filing lawsuits or arbitration application. All these privileges are offered to streamline the SFIPC operations. In addition to the fact that SFIPC should distribute the compensation from litigation or arbitration to the investors after deducting necessary costs and expenses, the Act forbids SFIPC from asking for any payment from investors in order to encourage investors to claim their rights and strengthen the non-profit role of SFIPC in protecting investors and promoting healthy development of Taiwan’s securities and futures markets.

SFIPC, established with the mission for providing investor protection services in accordance with the Act, has dealt with a number of class-action litigation cases. Investors can log on its website for details about the status of each case, or call investor protection hotline at (02)2712-8899 for further information or consulting services.

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Update Date:2015/12/26 11:39