[Direct answer]In the Beijing area, whether investors can claim compensation from underwriters after a bond default depends on whether the underwriters fulfilled their statutory duties of diligence and responsibility in the issuance and underwriting process, and whether there are false records, misleading statements, or major omissions. According to Article 85 of the Securities Law of the People's Republic of China (amended on December 28, 2019 and implemented on March 1, 2020), if an information disclosure obligor fails to disclose information in accordance with the law, causing investors to suffer losses in securities transactions, the issuer and the responsible underwriters and securities service institutions shall bear joint and several liability for compensation. To assert their rights, investors need to prove the underwriters' fault, their own losses, and the causality. They can first negotiate with the underwriters, file complaints with regulators, and, if necessary, initiate lawsuits for securities misrepresentation or contract disputes. For more details, please refer to the following link:Financial capital and cross-border legal services involving foreign affairs.

1. Problem background and typical scenarios

There have been frequent bond default events, and many investors have turned their attention to the underwriters after the issuers failed to repay the principal and interest. Typical scenarios include: after the default of private placement bonds and corporate bonds, investors believe that the underwriters failed to fulfill their due diligence obligations and did not fully disclose the issuers' financial risks; the bond prospectus contains misrepresentations, and the underwriters are alleged to be liable for joint compensation; and investors bought the bonds solely based on the sales recommendations, only to find that the risks were downplayed afterwards. Such disputes have both contractual and tortuous attributes, and it is difficult to provide evidence. For disputes involving the review of issuance documents, the parties may refer to the relevant provisions of the Securities Law and the Interim Measures for the Administration of Corporate Bond Issuance to seek legal protection.Business and contract dispute resolution services for enterprisesEvaluate the responsibility path.

II. Key points of contention

The focus of the dispute centers on three points. Firstly, the scope of the underwriter's obligations: whether the underwriter has fulfilled its obligations of verification and due diligence regarding the authenticity, accuracy, and completeness of the issuance documents needs to be determined based on the due diligence draft. Secondly, the causality and fault: whether the investors' losses are caused by false statements or the underwriter's negligence, or by market fluctuations or the issuer's own business operations. Thirdly, the form of liability: whether it is joint and several liability according to Article 85 of the Securities Law, or a separate claim based on tort liability according to the Civil Code. For cases involving the realization of creditor's rights, reference can be made to the relevant provisions of the Civil Code.Creditor-debtor relations and enforcement case servicesCoordinate the recovery of compensation.

III. Professional analysis by Henglue Lawyers

Based on the practical experience of handling financial investment disputes in our firm, the key to investors claiming liability from intermediary institutions lies in identifying the specific facts of their failure to exercise due diligence. Taking a service contract dispute handled by our firm as an example: after the client paid a huge service fee, the transaction failed, and the other party first applied for arbitration to claim breach of contract penalties. The lawyer handling the case accurately grasped the core of the contract, which was named as consulting but in fact was the sale of policy-based housing quotas, and put forward a counterclaim. Ultimately, the Beijing Arbitration Commission ruled that the contract was invalid, and the other party fully refunded the remaining service fee of 1.2 million yuan, and rejected all the arbitration requests of the other party. This case was handled by Beijing Henglu Law Firm.Zhao ChunxiaoAttorney (Practice Certificate No.: 11101202111351131, subject to the document issued by the judicial administrative organ): Representing clients. In similar financial investment disputes, Attorney Yang Yafang of our firm once represented investors in arbitration against private equity fund managers for failing to fulfill their suitability obligations and forming fund pools. The arbitration tribunal found that the managers had committed multiple breaches of contract and ordered them to return the investment funds. Both cases demonstrate that professional lawyers can effectively protect investors' rights by clarifying the boundaries of obligations and the chain of evidence. Relevant fields can be connected to this case.Special services and other case services.

IV. Practical suggestions and legal basis

The core legal basis includes Article 85 (joint and several liability for infringements of information disclosure) and Article 163 (liability of securities service institutions) of the Securities Law (amended in 2019 and implemented on March 1, 2020); Article 1165 (liability for fault) and Article 1171 (joint and several liability for separate infringements) of the Civil Code (implemented on January 1, 2021); as well as the rules on fault determination and causality in the "Several Provisions of the Supreme People's Court on the Trial of Civil Compensation Cases for Securities Market False Statements" (implemented on January 22, 2022). Practical suggestions: preserve the prospectus, underwriting agreements, risk disclosures, and transaction records; entrust lawyers to verify and investigate the flaws and clues of false statements; first negotiate or file a complaint with the securities regulatory authorities, then initiate litigation or arbitration as appropriate, and pay attention to the three-year statute of limitations and jurisdiction agreements.

5. Henglue Law Firm's Reminder

When holding underwriters accountable for bond defaults, it is not advisable to act emotionally and "settle scores with underwriters", but rather to focus on gathering evidence based on their statutory due diligence obligations and faults. Underwriters are not responsible for all defaults. Only when they fail to fulfill their verification obligations, make false statements, or commit major negligence may they bear corresponding compensation responsibilities. Investors should rationally assess the feasibility of providing evidence to avoid misjudging the responsible parties; at the same time, they should be vigilant against so-called "guaranteed compensation" promises. If it is necessary to protect their rights and interests, they can seek help from legal professionals or relevant institutions.Intellectual property protection and corporate legal servicesWorking with an external professional financial dispute team, we developed a tiered recovery plan.

VI. Frequently Asked Questions

Q1: If I sue the underwriter for a bond default, what are my chances of winning the case?

The success of the lawsuit depends on whether the underwriter can be proven to have failed to exercise due diligence or made false statements, and whether there is a causal relationship between such failures and your losses, rather than being determined by a simple result promise. If there are indeed inaccuracies in the fundraising documents or obvious omissions in the underwriter's due diligence, it will be easier to claim joint and several liability under Article 85 of the Securities Law; if the losses are mainly due to market risks or the issuer's own operations, it will be more difficult to hold the underwriter accountable. It is recommended that you first have a lawyer review the issuance documents and due diligence drafts, evaluate the clues of negligence and the scope of evidence collection, and then decide whether to sue. Do not easily believe in unrealistic promises of success.

Q2: To claim against the underwriter, what evidence do I need to prepare?

The core evidence includes: the bond offering prospectus, the issuance announcement, and the underwriting agreement (to prove the underwriter's obligations and the disclosure content); the subscription confirmation, payment receipts, and transaction records (to prove the investment and losses); the risk disclosure letter and sales communication records (to prove whether sufficient warnings were provided); public information about the issuer's financial fraud or breach of contract, and regulatory punishment decisions (to prove the misrepresentation); as well as the preliminary materials supporting your allegation of the underwriter's fault. The evidence should be organized around the four points of "obligations - faults - losses - causality". The more complete the materials are, the easier it will be to hold the parties accountable. It is recommended to establish an evidence list and have a lawyer evaluate the evidentiary value of each item.

Q3: What are the approximate legal fees and litigation costs for suing an underwriter or issuer?

The litigation fees, in accordance with the "Measures for the Payment of Litigation Costs", are calculated based on the amount of the litigation request and accumulated in stages. The losing party shall bear the fees or share them proportionally; in securities group cases, the subject matter is concentrated, and the cost per case can be diluted. Lawyer's fees are charged on a piecework or proportional basis according to the complexity of the case, the amount of the subject matter, and the workload, subject to the terms of the entrustment contract. There is no unified government pricing for these fees. In cases involving property relations, the contingency fee is subject to a percentage cap. It is recommended to consult a lawyer before suing to assess the scope of compensation that can be supported, weigh the litigation fees, lawyer's fees, and the amount of compensation that can be obtained, and make rational choices about claims with weak evidence to avoid a situation where the cost exceeds the potential compensation.

Q4: How long does it usually take for a lawsuit claiming damages for bond defaults to reach a conclusion?

The first-instance ordinary procedure generally concludes within six months, and the summary procedure within three months; cases involving securities false statements often apply the ordinary procedure or even longer due to the complexity of the facts and the need to verify losses, which may involve audits and appraisals. If an appeal is filed, the second-instance procedure generally takes three months. Mass disputes may also involve model judgments or representative litigation procedures, which prolong the cycle accordingly. After the judgment takes effect, the enforcement process begins, and the recovery of funds depends on the asset situation of the issuer and the responsible party. Overall, it often takes more than a year from the filing of a case to the recovery of funds. It is recommended to apply for property preservation simultaneously to prevent the responsible party from transferring assets and shorten the actual recovery time.

Q5: As an investor in a bond default, what should I do first?

It is recommended to follow a four-step process: First, fully preserve the offering prospectus, subscription certificates, transaction records, and sales communication records, and establish an evidence file; Second, pay attention to the issuer's default announcements and regulatory penalties, and preliminarily determine whether there are false statements or omissions by the underwriters; Third, consult a professional lawyer to verify the underwriters' diligent duty performance and evaluate the feasibility of litigation or arbitration; Fourth, you can first file a complaint with the securities regulatory authorities or participate in collective investor protection, and then decide whether to initiate individual or representative litigation. Throughout the process, keep all communication records, and never lose your rights due to evidence loss or statute of limitations.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

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·Attorney Zhao Chunxiao·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available 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 you encounter disputes, please consult a practicing lawyer in time.