55 Asian Legal Business | December 2024 Commercial Disputes of or imposed penalties, or following coverage by the media. The plaintiff needs to rely on regulatory decisions or media reports as evidence to demonstrate the defendant's false statement conduct. When determining whether false statement conduct has occurred, the court often considers whether the defendant's actions have already been subject to regulatory measures or administrative penalties by the regulator. Generally, if these circumstances exist, the likelihood of the defendant's actions being deemed to constitute false statements significantly increases. 2.2 Implementation date, disclosure date, base date, and base price of false statements 2.3 If the defendant's conduct is deemed to constitute false statements, to determine the scope of the plaintiffs who can file a claim, it is necessary to establish the implementation date, disclosure date, base date, and base price of the false statements (referred to as the "Three Dates and One Price"). Articles 7, 8, and 26 of the New Judicature Interpretation provide specific provisions on how to define the "Three Dates and One Price". In the context of the "Three Dates and One Price," the determination of the disclosure date is especially crucial. On the one hand, the disclosure of false statements often occurs as a process involving multiple factors such as market rumors, media reports and regulatory interventions, and the exact point to be considered as the disclosure date remains disputed; on the other hand, the determination of the disclosure date is closely related to whether the false statements are significant and the scope of plaintiffs who can file a claim, significantly impacting the final substantive outcome of the case. Amid the combined effects of these two factors, the determination of the disclosure date becomes the focus of dispute between the parties throughout the adjudication process of such cases. 2.4 Materiality of false statements The materiality of false statements is a prerequisite for the defendant to bear liability for false statements. Therefore, the issue of materiality often becomes the focal point of dispute between the parties in such cases. In particular, following the revision of the New Judicature Interpretation in 2022, the plaintiff is no longer required to establish that a defendant has previously been subject to administrative or criminal penalties for false statements before initiating such litigation. In cases where false statements have not led to administrative or criminal sanctions, disputes over the materiality of false statements have gradually become more complex. In theory, the judgment of materiality is subject to both subjective and objective criteria. Subjective criteria refer to the impact of false statements on investors' investment decisions. Objective criteria, on the other hand, focus on the impact of false statements on the trading price and volume of the relevant securities. According to Article 10 of the New Judicature Interpretation regarding materiality, when courts analyze and assess materiality issues, besides referring to statutory provisions, the fundamental criterion is the response of the securities market to the disclosure of false statements, which constitutes the objective standard. In judicial practice, courts typically consider the changes in trading volume and prices for the disclosure day and several subsequent trading days. However, the specific criteria for determining "significant changes in the trading price or volume of the relevant securities" are not definitively addressed in the New Judicature Interpretation, and a standardized judicial scale has not yet emerged in practice. Therefore, until further provisions are stipulated in relevant judicial interpretations, debates on materiality issues are expected to persist. 2.5 Regarding transactional causation and loss causation From the perspective of tort liability law, the party harmed by the tortious act must bear the burden of proof to demonstrate the causality between the tortious act and their loss. New judicature interpretations further distinguish causality into transactional causation and loss causation. Transactional causation refers to the causality between an investor's trading of specific stocks and false statements. Loss causality refers to the causality between an investor's investment loss and false statements. In order to reduce the burden of proof on investors, new judicature interpretations provide specific guidelines on the standard of proof for investors to prove these two types of causality. According to Article 11 of the New Judicature Interpretation, an investor only needs to prove that relevant transaction actions were taken after the date of false statement, but before the disclosure or correction date, thus fulfilling the burden of proof regarding the existence of a transactional causation. The burden of proof to deny the loss causation shifts to the defendant. Unless the defendant can demonstrate the specific circumstances defined in Article 12 of the New Judicature Interpretation, the court will determine the existence of a transactional causation based on the plaintiff's evidence. According to Article 31 of the New Judicature Interpretation, the court shall ascertain the causality between false statements and the plaintiff's losses, as well as other fundamental facts leading to the plaintiff's losses, in order to determine the scope of liability for compensation. In judicial practice, if investors can prove the existence of a transactional causation, the court will presume that there is a causality between the investor's losses and the false statement behavior. However, regarding other causes contributing to the plaintiff's losses, the court will also investigate according to the defendant's evidence and the method of loss calculation by commissioned professional institutions. The fluctuation in the price of securities is affected by false statements and the factors such as the issuer's operational performance, specific industry cycles and overall market conditions. The losses caused by these factors should not be borne by the defendant. However, quantifying and identifying the losses resulting from these factors presents a challenge in the current adjudication process of such cases. In judicial practice, courts
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