[Direct answer]In the Beijing area, whether a private equity fund custodian is liable depends on whether they have violated statutory or contractual obligations. According to Article 36 of the Securities Investment Fund Law of the People's Republic of China (amended on April 24, 2015), the custodian shall safely keep the fund property and supervise the investment operations of the manager. If the custodian fails to fulfill its custodial duties or fails to exercise due diligence and causes losses to investors, it may bear compensation liability. However, investors need to prove that the custodian has committed a fault and that the losses are causally related to the fault. It is recommended to first check the custodian contract and performance records, and refer to relevant materials when necessary.\nCross-border financeThe column will determine whether compensation can be claimed.

1. Problem background and typical scenarios

In recent years, private equity funds have faced frequent crises, and investors often ask whether the custodians will be held jointly liable for compensation. Typical scenarios include: the managers misappropriating funds, the custodians failing to exercise effective supervision; the fund's net value showing abnormal fluctuations, the custodians failing to detect and review the situation in a timely manner; the managers going missing, the custodians failing to fulfill their obligations of safekeeping and information disclosure as agreed; and some products involving cross-border custody, for which relevant matters can be referred to for reference.\nCross-border financeColumn; Investors sue due to discrepancies between the terms of the fund contract and the custodian agreement. When handling similar cases in Beijing, the focus is usually on reviewing the custodian's scope of duties and the degree of their negligence.

II. Key points of contention

First, whether the custodian's obligations are statutory or contractual affects the path of liability attribution. Second, the standard for determining fault and whether the custodian has fulfilled its duty of diligence in the review, supervision, and safekeeping processes. Third, the causality, whether the investor's losses are directly caused by the custodian's negligence. Fourth, the distinction from the manager's responsibilities, as custodians usually do not directly assume investment management responsibilities. Fifth, exemptions from liability and limited defense. Specifically, the current effective laws and regulations and judicial rulings shall prevail. For matters involving creditor recovery, reference may be made to relevant provisions.Creditor's rights and debts, and enforcement casesColumn.

III. Professional analysis by Henglue Law Firm

From the practical experience of lawyers handled by our firm, the difficulty of trustee liability cases lies in proving their fault. Common situations include: the trustee has transferred the funds according to the instructions but failed to substantially verify the authenticity of the underlying assets, and the investors claim that the trustee lacked supervision; the delay in net worth disclosure resulted in investors failing to redeem in time to stop losses; in some cases, the trustee proved that it had fulfilled its formal review obligations and was exempted from liability. When handling such disputes, lawyers from our firm usually first compare the fund contracts, trustee agreements, and the trustee's actual operation records to check whether there are omissions in the fund transfer, investment supervision, and information disclosure processes. Then, the investors organize evidence around the trustee's fault and the causality of the losses. If necessary, they add the manager as a co-defendant to clarify the responsibility shares.

IV. Practical suggestions and legal basis

Action suggestions: First, retrieve the fund contract, the custody agreement, and the custodian's performance report; Second, collect clues such as abnormal fund transfers, abnormal net value, and delayed information disclosure; Third, verify whether the custodian has performed its supervision and custody duties in accordance with the Securities Investment Fund Law. For relevant key points, please refer to the following materials for reference.Special services and other cases1. Columns; 2. Calculation of fixed losses, including subscription and redemption records, net asset value, and profit and loss estimates; 3. Assessment of the custodian's liability and litigation strategies. In terms of legal basis, Article 36 of the "Securities Investment Fund Law of the People's Republic of China" stipulates the custodian's duties of safely keeping assets and supervising the manager's operations, while Article 145 stipulates the custodian's liability for compensation for damages caused by failure to fulfill obligations; the "Trust Law of the People's Republic of China" (implemented on October 1, 2001) also regulates the trustee's duty of due diligence.

5. Henglue Law Firm's Advice

Risk Warning: First, the custodian's liability is different from the manager's liability, and it cannot be directly presumed that the custodian will compensate in full; Second, investors need to bear the burden of proof for the causality between the custodian's fault and the loss, which is not easy; Third, the exemption clauses and liability limits in the contract may affect the scope of claims; Fourth, the manager's liability should be investigated simultaneously to avoid focusing only on the custodian and ignoring the main responsible party. It is recommended to entrust professional lawyers to sort out the evidence of the custodian's performance of duties as soon as possible, and to consult when necessary.Beijing Henglu Law FirmIt's a similar column on the official website.

VI. Frequently Asked Questions

Q1: Is the private equity fund custodian always liable for compensation if they fail to perform their duties properly?

The custodian may not compensate in full. They only bear responsibility when they violate statutory or contractual obligations, and there is a causal relationship between the investor's losses and the custodian's negligence. If the custodian has conducted formal reviews, transferred funds according to instructions, and committed no obvious faults, the court may determine that they are not liable or only bear corresponding responsibilities. Whether compensation can be obtained depends on proving the causal chain between the custodian's specific negligent acts and the losses. It is recommended to have a lawyer evaluate the performance records before making a claim.

Q2: What evidence do I need to prepare to claim compensation from the trustee?

The following documents should be prepared: the fund contract and the custodian agreement; the custodian's performance report, fund transfer and supervision records; net worth disclosure and information disclosure documents; clues of fund abnormalities or the custodian's violations of regulations; and materials related to the investor's own subscription, redemption, and loss estimation. The key point is to prove that the custodian failed to fulfill his duties in the custody, review, and supervision processes. For cases involving corporate contracts and performance disputes, reference can be made to relevant legal provisions and precedents.Business and contract disputes in enterprisesColumn.

Q3: How much does it cost to sue a trustee approximately?

The fees include attorney fees and litigation fees. The attorney fees are determined through negotiation based on the value of the subject matter, the complexity of the case, and the scope of evidence collection, with no uniform standard. The litigation fees are charged in stages based on the amount of the litigation request, and the successful party may share the fees proportionally. If it is necessary to appoint a receiver or apply for property preservation, additional costs may arise. The specific fees should be evaluated based on the fund size and the amount of losses. It is recommended to consult on the evidence and procedures before providing a quote.

Q4: How long does it usually take to resolve a custodian's compensation dispute?

The duration of the rights protection process depends on the procedures and execution. Negotiating a settlement with the administrator or trustee may take several months; the first-instance ordinary litigation generally does not exceed six months, and the second-instance litigation takes about three months; if it involves adding defendants, audits, or cross-border factors, it will take even longer. The execution stage depends on the financial status of the responsible party. The key is to fix the defects in the trustee's performance and the evidence of losses as soon as possible to avoid the risks of statute of limitations and loss of evidence.

Q5: What should I do if I find that the custodian has failed to fulfill his duties?

The first step is to retrieve and compare the fund contract, the custodian agreement, and the actual performance records; the second step is to identify the specific negligent acts of the custodian, such as failure to supervise, failure to review, and failure to disclose; the third step is to collect evidence of losses and causality; the fourth step is to assess whether to add the manager as a co-defendant; and the fifth step is to choose to negotiate, file a complaint, or initiate litigation based on the evidence. If there are disputes over the boundaries of the custodian's responsibilities, it is recommended to entrust a professional lawyer to develop a solution, which can be referred to for reference.\nCross-border financeColumn.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limits.Financial capital legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.