1. Summary of Disputes
Mr. Wang, an investor, is a client of a securities company. In June 2022, he purchased two fixed income financial products, A and B, on the recommendation of the securities company's salesperson, Mr. Li. Mr. Wang stated that before purchasing the products, Mr. Li promised that these two financial products were fixed income products that guaranteed capital and income, and would not incur losses. But after purchasing, both products were affected by the market and incurred a certain degree of loss. Mr. Wang believes that the securities company has serious problems in the process of product sales, so he has submitted a mediation application to the Hubei Mediation Workstation of the China Securities Capital Market Legal Service Center, requesting compensation for losses.
II. Main Controversies
The main controversy in this case lies in the fact that investors believe that securities companies have not fulfilled their risk warning obligations in the process of product sales, and have given a commitment to break even, which violates their suitability obligations, and should be liable for compensation for their losses; The securities company believes that the sales process of the product is legal and compliant, and the product risk level matches the investor's risk tolerance level, so the company is not liable for compensation.
III. Mediation Process
After receiving the mediation application from both parties, the workstation mediator learned two key pieces of information: (1) The investor had previously purchased the same type of wealth management products from the securities company multiple times without incurring losses, so they believed that such products were more reliable. They took the initiative to consult with salesperson Li about products A and B, and then placed an order for purchase through their mobile phone. （2） The investor claimed that Li promised to guarantee the principal and return of two products before purchasing them, but could not provide corresponding written evidence.
So the mediator further understood the situation from both parties based on the above two pieces of information: the investor believed that although it was a voluntary purchase, Li not only did not correctly indicate the product risks before making the purchase, but also promised to guarantee the product's principal and return, which seriously misled himself and should bear the liability for compensation.
The securities company stated that after self-examination, Li has never promised to guarantee capital and returns to investors during the marketing process. But Li did indeed make multiple calls from investors requesting early redemption of the wealth management product after the product incurred losses. In order to persuade investors to continue holding the product and wait for the market to improve, he expressed that he could compensate for the principal loss at the time of maturity redemption. The securities company believes that the negotiation plan was not known by the company and is a personal behavior between employees and clients. The company itself does not have any violations and should not be held liable for compensation.
Based on the differences between the two parties, the mediator first explained to investors in conjunction with the new asset management regulations that rigid redemption of wealth management products has become history and that it is necessary to re evaluate the risks of fixed income wealth management products. The mediator sent multiple news reports to investors about the significant drawdown and losses of bank and securities investment products in 2022, guiding investors to correctly understand and recognize market and product risks. Secondly, the mediator exchanged views with the securities company regarding Li's promise to compensate for the loss of principal due during the dispute negotiation process. Due to the fact that the compensation commitment was made by Li during working hours on behalf of the company in handling disputes, it cannot be simply regarded as a personal act. There are obvious flaws in the company's dispute resolution and investor education work. The mediator explained the legal provisions on liability to both parties through relevant trial cases and provided reasonable mediation suggestions.
In the end, through the mediator's explanation of the law, investors understood that fixed income financial products did not represent the meaning of "fixed income" and were willing to give up excessive compensation claims. The securities company also recognized its shortcomings in dispute resolution work and was willing to take corresponding responsibilities. Both parties reached a consensus and the dispute was successfully resolved.
IV. Case Insights
In April 2018, the Guiding Opinions on Standardizing the Asset Management Business of Financial Institutions were officially implemented, prohibiting issuers or managers of asset management products from violating the principles of truthfulness and fairness by guaranteeing principal and returns, breaking the "rigid redemption". The net value of wealth management products from both securities firms and banks will fluctuate with market conditions.
On the one hand, for financial institutions, in the face of new situations, they need to adapt to policy changes, take advantage of the situation, strengthen employee compliance training in a timely manner, and improve employees' ability to practice in a standardized manner; Carry out risk warning and publicity education for investors, and effectively fulfill the obligation of "seller's responsibility".
On the other hand, investors should firmly establish risk awareness, fully understand their own risk tolerance, invest in suitable products based on their risk tolerance, comprehensively understand the product risk situation, accurately recognize the risk of product losses, respond rationally, and achieve "buyer's own responsibility".
