[Direct answer]In the Beijing area, the amount of joint and several compensation for intermediary agencies is usually based on the actual losses of investors and determined in combination with the degree of fault and causality. According to Article 163 of the Securities Law of the People's Republic of China (amended on December 28, 2019 and implemented on March 1, 2020), if the documents prepared and issued by securities service agencies contain false records, misleading statements, or major omissions, causing losses to others, they shall bear joint and several compensation liability with the clients, unless they can prove that they are not at fault; the joint and several liability shall not be divided into shares externally, but internally, compensation may be recovered according to the degree of fault and causality. The scope of compensation generally includes principal losses, interest, and reasonable legal defense costs, and the amount already repaid shall be deducted. The ordinary statute of limitations is three years, and the arbitration clause in the contract is final and binding. For more details, please refer to the relevant provisions.\nFinancial capital and cross-border legal services involving foreign affairs.

I. Problem Background and Typical Scenarios

Intermediary agencies assume functions such as verification, valuation, auditing, and legal witnessing in investment and financing and cross-border transactions. Once they fail to fulfill their duties, investors' losses are often irreversible. Typical scenarios include: accounting firms, law firms, and rating agencies issuing false documents in securities fraud; private equity fund managers failing to fulfill their suitability obligations and operating in violation of regulations; fund sales agencies making misleading promotions; oversights by due diligence agencies and registration agents in cross-border mergers and acquisitions; and disputes over the assisting obligations in the enforcement phase of foreign arbitration awards. The responsibilities and calculation methods of different roles vary significantly, and the handling rules can be referred to for more details.Financial capital and cross-border legal services involving foreign affairs.

II. Key points of contention

The dispute focuses on four points. First, the nature of liability: if the defendant intentionally or knowingly makes false statements and fails to correct them, they will generally bear joint and several liability with the client; if it is only ordinary negligence, the compensation ratio may be determined based on the degree of fault and causality, subject to the current regulations and adjudication rules. Second, the scope of compensation: it is limited to actual losses, including principal, interest, and reasonable legal defense costs. The amounts that have been paid or settled should be deducted. Third, internal shares: joint and several liable parties shall not divide shares externally. If the actual liability exceeds their own share, they may seek recourse from other joint and several liable parties. Fourth, procedural choice: if the contract contains an arbitration clause, the case will be settled through arbitration with final and binding effect; foreign-related factors also involve jurisdiction, applicable law, and enforcement of the arbitral award. When handling similar cases in the Beijing area, losses are typically identified based on regulatory findings, liquidation records, and fund flow analysis.

III. Professional analysis by Henglue Law Firm

A private equity fund arbitration case handled by Attorney Yang Yafang fully demonstrates the calculation process of intermediary compensation. On September 21, 2020, investor Ge ** signed a fund contract with A Investment Management Co., Ltd. through the A Wealth APP and subscribed to a private equity fund worth 1.6 million yuan. The next day, he paid the investment funds into the fundraising special account. However, the fund was terminated on August 4, 2021, and as of April 21, 2023, although 12 liquidations had been completed, Ge ** only received a total of 213,613.64 yuan. Investigations revealed that the fund manager failed to fulfill its due diligence obligations, failed to truthfully disclose risks, operated the fund in deviation from the contract, and invested a large amount of funds in the overdue projects of shareholder B Group. The rolling issuance and term mismatch constituted a fund pool, and the fund manager also failed to fulfill its information disclosure obligations. The applicant claimed to terminate the contract, return the 1.6 million yuan investment funds and pay interest, attorney fees, and arbitration fees; the respondent argued that it had fulfilled its due diligence obligations through risk disclosure letters and risk assessments, and the difficulty in repayment was due to liquidity risks caused by objective factors such as the pandemic, which should be borne by the investor. The fund was still in liquidation, and actual losses had not occurred yet. Attorney Yang Yafang sorted out evidence such as the fund contract, APP screenshots, liquidation reports, and quarterly reports, and retrieved administrative regulatory documents such as the Shanghai Securities Regulatory Bureau's "Decision on Ordering Corrective Measures" and "Decision on Issuing a Warning Letter", and applied for arbitration to the Beijing Arbitration Commission, putting forward the core view that if the seller fails to fulfill its due diligence obligations, the buyer should not bear the losses alone. The arbitration tribunal determined that the fund manager failed to fulfill its due diligence obligations, violated the prohibition of commingling fund assets, and failed to exercise due diligence. It also pointed out that Ge ** should bear corresponding responsibilities for submitting false annual income certificates and deduct the corresponding amounts accordingly. The final ruling requires the fund manager to pay investment funds of 1,386,386.36 yuan (deducting the already paid 213,613.64 yuan), and pay interest at the one-year loan market interest rate announced by the National Interbank Funding Center from September 8, 2023, in addition to attorney fees of 40,000 yuan and arbitration fees of 42,549.88 yuan, which shall be borne by the fund manager. The ruling also specifies a 10-day performance period and double interest for late performance. This case shows that the compensation amount is generally structured as the principal minus the already paid amount, plus interest and reasonable legal fees. The case was handled by Beijing Henglu Law Firm.Yang YafangThe lawyer (practice license number: 11101202211531374, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 163 of the Securities Law of the People's Republic of China (amended on December 28, 2019 and implemented on March 1, 2020) on the joint and several liability of securities service institutions; the provisions on fault identification and liability scope in the "Several Provisions of the Supreme People's Court on the Trial of Civil Compensation Cases for False Statements in the Securities Market" (Legal Interpretation [2022] No. 2, implemented in January 2022); Article 178 of the Civil Code of the People's Republic of China (implemented on January 1, 2021) on the external effect of joint and several liability and internal recourse; Article 509 on the obligation to perform duties in good faith; Article 9 of the Arbitration Law of the People's Republic of China (amended on September 1, 2017) on the finality of arbitration; and the provisions on the managers' obligations of suitability and operational norms in the Interim Measures for the Supervision and Administration of Private Equity Investment Funds (Decree No. 105 of the China Securities Regulatory Commission, implemented on August 21, 2014) and the Measures for the Suitability Management of Securities and Futures Investors (Decree No. 130 of the China Securities Regulatory Commission, implemented on July 1, 2017). Action list: 1. Secure contracts, payment vouchers, and holdings confirmation records; 2. Collect liquidation reports, quarterly reports, and regulatory penalty documents; 3. Calculate the principal, repaid amounts, interest, and litigation costs; 4. Confirm arbitration clauses or jurisdiction agreements and initiate arbitration or litigation in a timely manner; 5. If multiple responsible parties are identified, evaluate joint and several liability and additional party inclusion plans. For more details, please refer to the following document:Financial capital and cross-border legal services involving foreign affairs.

5. Henglu Law Firm's Reminder

The core of compensation cases involving intermediary institutions is the calculation of losses and the proof of fault. Investors should list the principal, the amount already redeemed, interest, and legal defense costs in detail, and use liquidation reports and regulatory documents to substantiate the fact that the intermediary institution failed to fulfill its duties. Never trust verbal promises of full compensation. The scope of compensation should be based on evidence and adjudication rules. Foreign-related and cross-border elements may also lead to issues of jurisdiction, applicable law, and enforcement. The earlier the evidence is secured, the more proactive the position will be. When handling similar cases in the Beijing area, it is recommended to entrust a lawyer as soon as possible.Beijing Henglue Law FirmProfessional lawyers calculate the losses and choose the path of arbitration or litigation.

VI. Frequently Asked Questions

Q1: If the intermediary agency is held jointly and severally liable for compensation, how much can investors recover?

The amount of compensation depends on the actual losses and the determination of fault. Generally, it is based on the loss of principal, deducting the parts that have been redeemed and settled, plus interest calculated according to the loan market reference interest rate and other standards, as well as reasonable legal fees, arbitration fees, and other reasonable protection costs; if the intermediary and the client bear joint and several liability, the right holder may request the partial or full repayment from the joint and several liable parties. If the manager himself breaches the contract or the investor provides false materials, the compensation may also be deducted as appropriate. The amount of compensation in each case is subject to evidence, the degree of fault, and the adjudication rules. No lawyer can unilaterally guarantee full compensation.

Q2: What evidence do I need to prepare to hold intermediary agencies accountable?

The core materials include: contracts and signing documents, such as fund contracts, sales documents, and suitability assessment questionnaires; financial evidence, including payment vouchers, transaction records of the special fundraising account, and position confirmation records; information disclosure documents, including prospectuses, quarterly reports, liquidation reports, and risk disclosure letters; regulatory documents, such as orders for correction from securities regulatory authorities, warning letters, and punishment decisions; communication records, such as sales promotion scripts, customer service responses, and meeting minutes; and loss evidence, including records of amounts already redeemed and the basis for interest calculation. The materials should be organized into three stages: fundraising, investment, and exit, to form a complete chain.

Q3: How much do the fees for suing a real estate agency typically cost?

Arbitration fees or litigation fees are calculated in stages based on the amount of the claim: arbitration cases are charged by the arbitration institution according to its rules, and the standard is generally equivalent to litigation fees; litigation cases are paid in accordance with the "Measures for the Payment of Litigation Fees" (State Council Decree No. 481, implemented on April 1, 2007), with the losing party bearing the costs and the partially successful party sharing the costs proportionally. Additional fees are required for property preservation and judicial audits. Lawyer's fees are determined through negotiation between the law firm and the client, and are commonly charged as a percentage of the principal amount, but must not violate the fee management regulations. It is recommended to calculate the amount that can be claimed and all costs together before filing a lawsuit.

Q4: How long does it take for intermediary agencies to resolve compensation disputes?

For arbitration cases, the arbitral tribunal generally issues a ruling within a few months after the tribunal is established. The ruling is final and binding, with higher efficiency. For litigation cases, the first-instance ordinary procedure is completed within six months and the simplified procedure within three months. If judicial audits or loss appraisals are involved, the appraisal period is not included in the time limit for trial, and the process usually takes several months longer. If the defendant's whereabouts are unknown and service by public notice is required, or if service and enforcement involve overseas entities, the timeframe will be further extended. Overall, cases with clear facts typically take half a year to a year to reach a conclusion, while those involving more cross-border factors may take over a year to resolve.

Q5: If I find that the intermediary agency has failed to fulfill its duties, what should I do first?

Four steps to proceed: Firstly, fix the contract, payment and position certificates, and keep sales promotion materials and customer service communication records; Secondly, retrieve the liquidation report, quarterly report and industrial and commercial files, and check the fund flow and information disclosure; Thirdly, retrieve and fix regulatory documents, such as the regulatory authorities' orders for correction, warning letters or punishment decisions; Fourthly, calculate the principal, paid amount and interest, confirm the arbitration clauses or jurisdiction agreements in the contract, and promptly initiate arbitration or litigation and apply for property preservation. For cross-border entities or assets, it is advisable to engage professional lawyers as soon as possible to design recovery plans.

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

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Financial capital legal services·Attorney Yang Yafang·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.