[Direct answer]In the Beijing area, if there are huge losses in fixed investment in funds, whether it is possible to sue the sales agency depends on whether the agency has fulfilled its obligation of appropriateness in the sales process. If there are situations such as failure to conduct risk assessment, misleading promotion, selling high-risk products to investors with unmatched risk tolerance, and failure to fully disclose risks, investors can request the sales agency to compensate for the losses in accordance with Article 72 of the "Memorandum on Civil and Commercial Trial Work of the National Court" (issued on November 8, 2019); if the agency has fulfilled its obligations of understanding the client and informing the risks in accordance with regulations, the losses are due to normal market fluctuations, and in principle, the investors should bear the losses themselves. It is recommended to fix the evidence of assessment, promotion, and transaction as soon as possible before deciding on the path of protecting rights, and you can refer to it for reference.\nCross-border financeColumn.

1. Problem background and typical scenarios

Such problems are common in several situations: First, after several years of fixed investment, the losses exceed 30% of the principal or even halve the investment amount, and investors believe that the recommending banks, securities firms, or third-party platforms have not made proper recommendations; Second, when opening an account to purchase, no risk assessment was conducted, or the assessment was done by sales staff on behalf of investors; Third, sales staff verbally promised "guaranteed returns" and "steady profits", downplaying the risk of drawdowns; Fourth, elderly investors or those with low risk tolerance were recommended products that clearly exceeded their tolerance; Fifth, the actual products purchased differed from the promotional materials and the content of the dual-recorded videos. When the Beijing District Court hears such disputes over financial entrusted wealth management contracts, it usually first reviews the performance of the sales-side's due diligence obligations, and then determines who should bear the losses.

II. Key points of dispute

First, whether the obligation of appropriateness has been fulfilled, which includes four aspects: understanding the client, understanding the product, risk matching, and risk disclosure. The absence of any of these aspects may constitute a fault. Second, the burden of proof for the obligation of disclosure. According to Article 76 of the Guidelines, the selling institution cannot claim exemption from liability by simply having the investor write "I am aware of the potential risk of capital loss". If no other evidence is provided, the court will not support this claim. Third, the causality and the cause of the loss. Institutions often use the argument of systemic market decline to defend themselves. The court will distinguish the respective contributory factors of the sales fault and market factors. Fourth, the allocation of the burden of proof. According to Article 75, the selling institution bears the burden of proof for fulfilling the obligation of appropriateness. If it fails to provide evidence, it will bear the adverse consequences. Fifth, the scope of compensation. It is usually for the loss of principal and interest, and the redeemed portion and dividends should be deducted. Sixth, the defendant's choice. The issuer and the selling agency can be listed as co-defendants. Specific determinations shall be based on the currently effective laws, regulations, and judicial rulings. For cases involving the contractual liability of institutions, reference can be made to relevant provisions.Business and contract disputes in enterprisesColumn.

III. Professional analysis by Henglue Law Firm

Judging from the practical experience of lawyers from our firm in handling financial and wealth management disputes, the key to determining whether the seller can be held accountable lies in the evidence from the sales process. Common forms include: bank customer managers using phrases such as "spreading investment costs over time and ensuring long-term profits" to downplay risks; risk assessments that are merely a formality or even filled out by others on behalf of investors; recommending medium- to high-risk products to investors who are close to retirement and clearly conservative in their investment approach; and promotional materials that promise returns that contradict the contractual risk disclosure clauses. Regarding the court's position, if the seller cannot provide evidence, it is presumed that they have failed to fulfill their duty of suitability; however, if the investor has years of investment experience and multiple similar transaction records, the court may reduce the seller's liability on a discretionary basis, that is, offsetting faults. There are three common pitfalls: first, delaying claims and exceeding the statute of limitations; second, only complaining to the seller or regulatory authorities without simultaneously preserving evidence, leaving the investor at a disadvantage in subsequent litigation; third, only focusing on loss figures and ignoring details such as risk assessment questionnaires, dual-recording audio and video, and chat records that determine the outcome of the case. It is recommended that investors seek professional legal advice as soon as possible to assess the strength of their evidence before choosing a path of negotiation, complaint, or litigation.

IV. Practical suggestions and legal basis

Action suggestions: 1. Immediately collect and preserve account opening documents, fund contracts, risk assessment questionnaires, promotional brochures, sales staff promotion records, WeChat chat and call recordings, dual-recording videos, and transaction records; 2. First, file a written complaint with the distribution agency and keep the response, and simultaneously report the matter to the regulatory authorities; 3. If mediation fails, promptly file a lawsuit within the three-year statute of limitations and, if necessary, apply to the court to retrieve the dual-recording materials; 4. Reasonably identify the defendants and claims in the lawsuit, seeking compensation for the principal and corresponding interest losses; 5. Carefully decide whether to redeem or continue subscribing to regular investment plans to avoid exacerbating losses and triggering new disputes. Legal basis: Articles 72 to 78 of the "Memorandum on Civil and Commercial Trial Work of National Courts" (issued on November 8, 2019) systematically stipulate the obligation of suitability, burden of proof, and compensation for losses; Article 188 of the "Civil Code of the People's Republic of China" (effective on January 1, 2021) stipulates the three-year statute of limitations; The "Securities Investment Fund Law of the People's Republic of China" (effective on June 1, 2013 and amended on April 24, 2015) also contains clear requirements for the conduct of fund sales agencies.

5. Henglu Law Firm's Reminder

Risk Alert: Firstly, investment losses do not necessarily mean that the institution is at fault. Protecting one's rights should be based on evidence of sales defects, and one should not expect that "if you lose, the institution must compensate you". Secondly, the statute of limitations for litigation is three years, starting from the date when one knows or should have known that his rights have been infringed. Delaying action will seriously harm one's rights. Thirdly, evaluation questionnaires and double recording are key evidence. After purchasing a product, one should promptly apply to the institution for inquiry and preservation of records. Fourthly, avoid making emotional redemptions or engaging in breach of contract actions, which may lead to the expansion of losses and make it difficult to claim compensation. For financial disputes involving funds, wealth management products, etc., you can seek advice from professionals.Beijing Henglue Law FirmOn the official website, in the corresponding column, professional lawyers will evaluate the case path.

VI. Frequently Asked Questions

Q1: If I suffer huge losses from regular investment in funds and sue the distributor, can I win the case?

There is no fixed answer, and the outcome depends on the evidence of the duty of suitability. If it can be proven that the agency failed to conduct a risk assessment, recommended products were not matched with the client's risk tolerance, or the risks were not disclosed or the promised returns were not fulfilled, according to Articles 72 and 76 of the "Memorandum of the National Court Conference on Civil and Commercial Trials", the agency should compensate for the principal and interest losses, and the likelihood of winning the case is relatively high; if the agency provides evidence to prove that it has fully fulfilled its obligations of assessment and disclosure, and the losses are due to market fluctuations, the court will generally reject the claim. In such cases in Beijing courts, the focus is mainly on the evidence of video recording and risk assessment. It is recommended to conduct evidence evaluation before suing.

Q2: What evidence do I need to prepare when suing a sales agency?

The core evidence includes: the account opening agreement and fund contract, risk assessment questionnaire and results, sales promotion records, promotional materials, WeChat chat and call recordings, dual-recording videos, transaction records, and loss details. The focus is on proving two points: first, the investor did not receive true and complete risk disclosure before purchasing the product; second, the recommended product does not match the investor's risk tolerance. If the evidence is insufficient, the investor can apply to the court to retrieve the dual-recording and assessment files from the institution. If the institution refuses to provide them or fails to provide evidence, it shall bear the adverse consequences in accordance with Article 75 of the Guidelines.

Q3: How much does it cost to litigate such cases?

The fees include attorney fees and litigation fees. Attorney fees are determined based on the amount of the dispute, the complexity of the evidence, and whether it involves evidence collection and negotiation, with no uniform standard; litigation fees are paid in stages based on the amount of the litigation request, and the court will share the fees proportionally in the event of a victory or partial victory. If the subject matter is large, there may also be property preservation fees involved. It is recommended that you first have a lawyer evaluate the evidence and the expected compensation range, and then decide on the scale of investment to avoid the imbalance of the cost of protecting rights being higher than the amount of losses.

Q4: How long does it take to sue a sales agency?

The first-instance ordinary procedure generally concludes within six months from the date of accepting the case, and the simple procedure can be concluded within three months if the facts are clear and the disputes are not significant. If the other party appeals, the second-instance procedure will take about three months. If it is necessary to retrieve the double recording and appraise the authenticity of the evidence, the period will be extended accordingly, and the overall timeframe is usually between half a year and one year. The key is to fix the evidence completely before suing to reduce the repeated supplementation of evidence and prolong the litigation process.

Q5: What should you do if you suffer huge losses from regular investment in funds?

The first step is to fix the evaluation, promotion, dual recording, and transaction evidence; the second step is to file a written complaint with the agency and report it to the regulatory authorities, striving for a negotiated compensation; the third step is to calculate the three-year statute of limitations simultaneously to avoid losing the right to sue due to time limitations; the fourth step is to sue the agency promptly if no agreement is reached, claiming that the agency failed to fulfill its duty of suitability and compensate for the principal and interest; the fifth step is to formulate a strategy with the help of professional lawyers, which can be referred to for reference.\nCross-border financeColumn.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm about specific situations.

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, in order to avoid missing the statutory time limits.Financial capital legal services·Beijing Henglu 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. If a dispute arises, please consult a practicing lawyer in time.