As asset management transaction structures grow increasingly complex, how can the boundaries of rights and liabilities be clarified under multi-layer nesting structures?

With rapid iteration and innovation of financial products, how can targeted judicial adjudication protect investors¡¯ legitimate rights and interests and regulate the industry ecosystem?

To provide targeted support for the development of Shanghai as a global asset management hub, actively respond to the judicial needs of the asset management sector, and continuously improve the law-based business environment for finance, the Shanghai Hongkou District People¡¯s Court (hereinafter referred to as Hongkou Court) held a press conference on the afternoon of September 4 to release the trial status and typical cases of disputes on asset management.

At the press conference, Sha Xun, Vice President of the Hongkou Court, briefed attendees on the court¡¯s trial of asset-management-related disputes over the past five years. Miao Huan, Chief Judge of the Financial Trial Division, introduced seven typical asset-management-related cases. The press conference was hosted by Xu Yang, Director of the Political Department and Press Spokesperson of the court. Attendees included deputies to the Shanghai Municipal People¡¯s Congress, members of the Hongkou District Committee of the Chinese People¡¯s Political Consultative Conference (CPPCC), representatives of the Shanghai Asset Management Association (SAMA), the Asset Management Association of Shanghai (AMAOS), and asset management institutions, as well as journalists.

Review of Trial Trends and Analysis of Dispute Characteristics

The briefing shows that the Hongkou Court accepted a total of 223 dispute cases on asset management from 2021 to the first half of 2026. In terms of case types, the cases cover multiple categories including tort liability, property damage compensation, contract, and entrusted wealth management contract. Among them, tort liability disputes account for the largest share, totaling 113, representing 45% of all cases. In terms of subject amounts, a vast majority of these cases involve small and medium-sized claims and a small proportion involve high-value ones, with a relatively high concentration of cases brought by small and medium-sized investors seeking remedies.

In terms of case closing methods, the people¡¯s court has achieved positive results in diversified dispute resolution relying on working mechanisms such as coordinated handling of similar cases, multi-channel dispute settlement, and resolving mass disputes through model judgments.

The briefing summarizes five major trial characteristics of cases on asset management. First, multi-party litigation is a prominent feature. Disputes may arise across the entire process including fundraising, sales, and exit, with intertwined boundaries of liability among all parties. Second, the bases of claims are compound and interwoven. Disputes fall under different causes of action and there exists concurrence of claims. Third, stricter standards apply to the review of evidence for online contracting. As online promotion and sale of asset management products have become increasingly prevalent, electronic evidence grows more important in cases. Fourth, mechanisms for the resolution of mass asset management disputes continue to be refined. Approaches such as coordinated handling of similar cases, model judgments and mass mediation have continuously unified adjudication criteria and reduced investors¡¯ costs for seeking remedies. Fifth, exit and liquidation status affects loss determination. Facts concerning exit and liquidation are relatively complicated and constitute the core controversial issue in the current trial of asset management disputes.

Identification of Legal Risks to Advance Collaborative Governance

Centered on the four core links of ¡°fundraising, investment, management, and exit¡± in the asset management sector, the briefing systematically sorts out the legal risks facing the industry at present:

At the fundraising stage, there are two-way faults including inadequate compliance in the business conduct of institutions and information concealment by investors. The boundaries of rights and liabilities under multi-layer distribution models are ambiguous, making liability identification difficult.

At the investment operation stage, some institutions illegally exceed investment scopes, evade supervision through nested structures, and conduct perfunctory risk assessments. Mismatches between products and investors¡¯ risk tolerance are prominent.

At the operation and management stage, the criteria for defining managers¡¯ diligent performance of duties are vague. The electronic evidence preservation system for online businesses is incomplete, exposing institutions to the risk of failure to adduce evidence.

At the liquidation and exit stage, the contractual provisions governing liquidation are too general. Some institutions are slack in performing their duties. Multi-layer structures lead to the shirking of responsibilities and prolong the period for investors to seek remedies.

In response to the above issues, the Hongkou Court has put forward tiered collaborative governance measures from the perspective of multiple stakeholders. For instance, at the regulatory level, it has recommended that competent industrial authorities refine industry operational norms, improve the full-process regime for the liquidation of asset management products, and bridge institutional gaps. At the asset management institution level, it has held entities accountable for their primary compliance obligations, improved full-process sales risk control systems, and clarified the boundaries of rights and liabilities for multi-layer distribution. At the investor level, it has steadily deepened financial legal publicity to guide investors to develop rational investment awareness and seek remedies rationally through legal channels.

Release of Typical Cases to Provide Judicial Guidance

The seven typical cases on asset management released at the press conference focus on key and frequently-occurring issues in the sector, including validity determination of arbitration clauses, compliance of cross-institutional distribution, managers¡¯ diligent performance of duties, and protection of investors¡¯ rights and interests. These vivid precedents clarify legal boundaries and regulate industry conduct.

In one tort liability dispute involving an objection to jurisdiction, the investor filed a lawsuit after suffering losses from subscribing to asset management products. The investment management company involved raised a jurisdictional objection, contending that the arbitration clause in the partnership agreement in question could exclude the jurisdiction of the people¡¯s court. The people¡¯s court held that arbitration agreements are subject to the principle of relativity. The investor was not a party to the partnership agreement, and no separate arbitration consensus had been reached among the parties. Therefore, the arbitration clause was not binding on the investor, and the jurisdictional objection was dismissed in accordance with law. This case clarifies the validity boundary of arbitration clauses under multi-layer asset management transaction structures and prevents upper-tier transaction parties from improperly depriving investors of the right to judicial remedies through contractual arbitration clauses.

In one property damage compensation dispute concerning trust products distributed by a fund sales institution, the institution promoted trust products in the name of providing customer services and completed sales after accepting altered asset certificates and failing to conduct prudent verification. Default on the underlying bonds of the trust caused substantial principal losses to investors. The people¡¯s court held that the institution substantially participated in the entire sales process and owed suitability obligations. It was at fault for failing to perform the obligation to verify qualified investors and should compensate part of the losses. This case makes clear that any entity that substantially conducts sales activities shall bear corresponding suitability obligations. It carries cautionary implications for regulating cross-category sales of financial products and strengthening the review of qualified investors.

Going forward, the Hongkou Court will continue to deepen its efforts in asset management adjudication, strengthen rule supply, effectively respond to the public¡¯s new expectations for a law-based business environment, and consolidate the legal foundation for further developing Shanghai as a global asset management hub.

Comments from Deputies and Members

Zhuang Xiao, Deputy to the Shanghai Municipal People¡¯s Congress and Chief Technology Officer of Shanghai Gold Exchange

The Hongkou Court, based on the practical needs of advancing the development of Shanghai as a global asset management hub, released the trial status and typical cases of disputes on asset management, giving full play to the rule-guiding and policy-guaranteeing roles of judicial adjudication. The press conference not only provides clear guidance for asset management institutions to standardize their business operations, but also conducts legal publicity on rational investment for investors, extending dispute resolution from individual cases to industry governance. It is expected that courts in Shanghai will further strengthen coordination and interaction with regulators and industry associations to consolidate the legal foundation for the sound development of the asset management sector.

Wang Xiaoming, Member of the CPPCC Hongkou District Committee and Managing Partner of Shanghai Jiuyi Yonglin Private Fund Management Co., Ltd.

Asset management disputes concern the rights and interests of the vast number of investors and constitute a key issue of financial livelihood. The briefing on trial status and the released typical cases squarely address issues in trial practice, sort out the real challenges faced by all participating parties, and deliver thorough analysis. The sound development of the asset management industry requires joint efforts of all stakeholders. As market participants, we will take judicial adjudication as guidance, fulfill our duties of diligent management, and effectively safeguard investors¡¯ legitimate rights and interests.