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Compensation Rules to Ensure Investment Interests
Chinese law makers are now considering adding clauses concerning civil compensation by fund managers and custodians into the proposed investment fund law, which is expected to come out next year.
With the new rules, investors could be compensated for their financial losses caused by mistakes or misconduct of fund managers or custodian banks, including false information disclosure.
The money used for compensation should come from assets owned by the violators themselves instead of from the entrusted funds, said Li Yining, head of the law's drafting panel.
If the clauses are formally written into the law, it will exert more pressure on fund managers to act more professionally and follow standards, and help to ensure civil compensation in cases of irregularities in fund management and custody, Li made the remark at a seminar Tuesday in Beijing, the Beijing-base newspaper reports.
Given the irregular management of China's security trade, law makers are pushed to revise the country's Investment Fund Law, which could not effectively protect investors' interests and regulate fund managers and custodians.
The latest draft of the law is scheduled to be submitted to the Standing Committee of the NPC in June, and the result is expected to come out as early as next year, after months of reviewing procedure, the newspaper said.
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