[Direct answer]In the Beijing area, if the trustee does not file a lawsuit, eligible holders can protect their rights directly in their own names, the path of which depends on the legal relationship. In trustee management structures such as funds and trusts, when the manager fails to perform his duties or breaches the contract, investors can claim rights according to the contract agreement or legal provisions; private equity fund investors can also claim that the manager has not fulfilled his duty of due diligence and request compensation according to the "Interim Measures for the Supervision and Administration of Private Equity Investment Funds" (implemented on August 21, 2014) and other regulations. Whether it is possible to sue directly and who to sue depends on the contractual privity and the nature of the entrusted property. For more details, please refer to the following link:Financial capital and cross-border legal services involving foreign affairs.

I. Problem background and typical scenarios

After the fund defaults and financial products default, investors often find that "they did not sign a contract directly with the defaulting party", but instead handed over their money to the manager, who then invested it externally. Typical scenarios include: private equity fund managers failing to fulfill their suitability obligations, funds being invested in related parties or forming a fund pool, and investors wanting to protect their rights but being told "you should contact the manager, who in turn says to hold a holders' meeting"; trust plan trustees neglecting to recover the repayment from the financing party. When handling similar cases in Beijing, investors often miss opportunities due to unclear subject and path. For more information, please refer to the relevant rules.\nFinancial capital and cross-border legal services involving foreign affairsThe practical guidelines.

II. Key points of dispute

The controversy focuses on three points. Firstly, the subject of the lawsuit: Investors and underlying financing parties usually do not have direct contracts, and whether they can directly sue the financing parties depends on whether there are statutory breakthrough circumstances; claims against managers are based on agency or trust relationships. Secondly, the liability boundaries of managers: Whether the duties of suitability, diligence, information disclosure, and prohibition of commingling of assets have been fulfilled is the core of the claims. Thirdly, the difficulty of providing evidence: Investors need to prove the causal relationship between the manager's breach of contract and their own losses. The court tends to review the contractual relativity and the manager's fulfillment of obligations.

III. Professional analysis by Henglue Lawyers

The arbitration case of a private equity fund investment handled by Attorney Yang Yafang is a typical example of investors directly claiming the manager's liability. Investor Ge * subscribed to a private equity fund of A Investment Management Co., Ltd. with a total investment of 1.6 million yuan. After the fund was terminated and liquidated, only 213,613.64 yuan was paid out, and the remaining principal and profits were delayed for a long time. Ge * entrusted Attorney Yang Yafang to apply for arbitration to the Beijing Arbitration Commission, pointing out that the manager failed to fulfill the obligation of suitability, engaged in pooled fund business, and failed to fulfill his due diligence obligations. The attorney retrieved the fund contract, liquidation report, quarterly report, and administrative supervision documents from the Shanghai Securities Regulatory Bureau to form a complete chain of evidence. The arbitration tribunal ruled that the manager failed to fulfill the obligation of suitability and violated investment operation regulations, ordering the return of 1,386,386.36 yuan of investment funds and interest, attorney's fees of 40,000 yuan, and arbitration fees of 42,549.88 yuan. This case reminds us that when the manager breaches the contract, investors can bypass the passive situation of "waiting for the manager's action" and directly claim compensation in their own name. This case was handled by Beijing Henglu Law Firm.Yang YafangThe attorney (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 the "Trust Law of the People's Republic of China" (implemented on October 1, 2001) regarding the obligations of trustees and the rights of beneficiaries; 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) regarding suitability, diligence obligations, and prohibition of fund pooling; the "Measures for the Suitability Management of Securities and Futures Investors" (implemented on July 1, 2017) regarding understanding client needs and product matching; and the "Civil Code of the People's Republic of China" (implemented on January 1, 2021) regarding breach of contract liability. Action list: First, verify the fund contract and suitability documents to confirm whether the manager has fulfilled his duties. Second, collect evidence related to fund promotion, risk warnings, liquidation, and underlying assets. Third, pay attention to regulatory penalties and other official documents. Fourth, choose arbitration or litigation according to the contract and legal provisions. For more details, please refer to the following link:Financial capital and cross-border legal services involving foreign affairs.

5. Henglu Law Firm's Advice

Investors are most likely to fall into the passive situation of "waiting for the manager to sue", while the manager himself may be the party in breach of contract. Waiting will only exacerbate the losses. The key is to assess the manager's performance of obligations as soon as possible, and fix evidence of inappropriate practices, fund commingling, and inaccurate information disclosure. When handling similar cases in the Beijing area, evidence can be obtained through the following methods:Attorney Yang YafangUnder the professional guidance of the team, determine the direct path to protect one's rights.

VI. Frequently Asked Questions

Q1: If the manager doesn't show up, can investors win the lawsuit on their own?

It depends on the evidence and the application of the law. If it can be proven that the manager failed to fulfill his duty of suitability, did not perform his duties diligently and conscientiously, or engaged in acts such as commingling or misappropriating property, and that these breaches of contract are causally related to the losses, the probability of the claim being supported is higher. However, the outcome of each case depends on the evidence and the court's determination, and no lawyer can guarantee the outcome unilaterally. In the arbitration case handled by Attorney Yang Yafang, the manager was found to have committed multiple breaches of contract, and the applicant was ordered to return more than 1.38 million yuan, indicating that there is practical scope for direct protection of rights.

Q2: What evidence should investors prepare when seeking justice directly?

The core materials include: fund contracts, risk disclosure documents, suitability assessments and follow-up records; payment receipts and proof of holdings; liquidation reports, quarterly reports, and underlying asset disclosure documents; promotional materials; clues of the manager's breach of contract, such as fund pools, related-party transactions, and evidence of false information disclosure; and official documents such as regulatory administrative punishment decisions or administrative supervision measures. The materials should form a chain of "violation of obligations - occurrence of losses - causality".

Q3: How much does it cost for investors to protect their rights?

The arbitration or litigation fees are paid according to the amount of the claim as the base, in accordance with the "Measures for the Payment of Litigation Fees" (State Council Decree No. 481, implemented on April 1, 2007) or the arbitration rules. The higher the amount of the claim, the higher the fees will be, and the losing party usually bears the costs after the victory. Lawyer's fees are determined by the law firm based on the amount of the claim and the complexity of the case, and there is no unified government pricing. Compared with the possible loss of the principal, the marginal cost of timely safeguarding rights is usually controllable, but it needs to be evaluated in combination with the expected recovery of the payment.

Q4: How long does it take from initiating the process to receiving compensation?

Arbitration cases are generally concluded within several months, and the Beijing Arbitration Commission applies a simplified procedure with higher efficiency. For litigation, the first-instance simplified procedure takes three months, and the ordinary procedure takes six months. Complex cases can be extended. The enforcement stage depends on the other party's financial situation. Beijing has relatively mature experience in handling financial disputes, but the difficulty in liquidating underlying assets may prolong the process. The earlier the evidence is provided and the earlier the litigation is initiated, the more likely it is to take the initiative in liquidation and enforcement.

Q5: If I find that the manager has breached the contract and is not taking any action, what should I do specifically?

Four steps: First, retrieve the fund contract, suitability and liquidation materials to determine the point of the manager's breach of duty; Second, collect evidence such as promotion materials, underlying assets, and regulatory documents; Third, check the dispute resolution clauses and choose arbitration or litigation; Fourth, initiate procedures within the statute of limitations and pay attention to property clues. If the manager himself is the breaching party, do not wait passively. Hire a professional lawyer as soon as possible to evaluate direct protection plans. For more details, please refer to the following link:\nFinancial capital and cross-border legal services involving foreign affairs.

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 facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, 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 a dispute arises, please consult a practicing lawyer in a timely manner.