Jiang, Chengxiao; (2025) Beyond the 'One-Size-Fits-All' Model: Reassessing Securities Litigation Reform Through Comparative Institutional Complementarity. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This study presents an integrated framework for comparing securities litigation systems by combining three perspectives: conventional comparative analysis of formal rules, a revised functionalist view assessing institutional effectiveness (Functional Magnitude), and the principle of institutional complementarity from comparative economics. Applying it to the U.S., U.K., and China reveals the deeper logic behind their institutional differences. In the U.S., recent enforcement data explains why an active class action system has taken root. The U.S. experience shows that reform must stay flexible and responsive to market conditions. In retail-driven, highly liquid and large-volume markets, overreliance on public enforcement is risky. Thus, private enforcement should be strengthened. In the U.K., the high threshold for private enforcement in FSMA 2000 and common law, combined with the Financial Conduct Authority’s cautious approach to investor compensation, support a conservative litigation model. This suggests that securities litigation reform should focus on incremental adjustments to existing frameworks rather than pursuing sweeping or disruptive changes. In China, an analysis of the securities enforcement system during 2019 Securities Law reform reveals that the combination of a unitary liability framework and the Special Representative Litigation (SRL) is not coincidental, but rather a natural product of the country’s institutional environment. This argues that effective reform must align with the state’s institutional DNA, and legal transplants must be adapted to local political, economic, and cultural contexts. Based on these insights, the study proposes a three-step approach to understanding the role of securities litigation and considering any reform: (1) Reform should treat securities litigation laws as part of a dynamic governance system by assessing their compatibility with local institutions; (2) Reform should align legal design with the market’s development stage—public enforcement is key in emerging markets, while mature markets benefit from a coordinated mix of resource-efficient public oversight and enhanced private enforcement; (3) Reform should focus on improving existing systems through functional upgrades and better integration, rather than creating excessive new regulations that risk inefficiency and market disruption.

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