Expectations and Misconceptions of Retail Investors Regarding Class Actions Under the New Securities Law, and Lawyers’ Recommendations

Article 171 of the Securities Law stipulates that during an investigation by the securities regulatory authority under the State Council into a unit or individual suspected of violating securities laws, if the investigated party submits a written application promising—within a time frame approved by the regulatory authority—to rectify the alleged unlawful conduct, compensate affected investors for losses, and eliminate harm or adverse impacts, the regulatory authority may decide to suspend the investigation. If the investigated party fulfills its promise, the authority may decide to terminate the investigation; if it fails to fulfill the promise—or if other circumstances prescribed by the State Council arise—the investigation shall resume. Specific implementation measures shall be formulated by the State Council. If a listed company is under investigation for suspected violations—even without formal penalties—yet sufficient evidence has already been gathered by the China Securities Regulatory Commission (CSRC), conditions for initiating a class action lawsuit may already be met (the traditional ‘precondition’—i.e., prior administrative punishment—is not mandated by law, and judicial interpretations on this point are already contested; courts could readily establish a dedicated channel for investor protection institutions). Once an investor protection institution meets the requisite conditions to initiate a class action, the court issues a public notice, the securities depository and clearing institution registers eligible investors on its behalf, professional institutions calculate investors’ losses—net of systemic risk—and investors confirm their participation individually. Upon completion of the class action, the CSRC may terminate its investigation against the non-compliant company. Such a scenario remains highly plausible. Of course, the above outlines a purely speculative procedural pathway—but one I believe holds genuine practical feasibility. Provided no laws are violated, all parties stand to benefit: this approach is viable, and I recommend that the CSRC and investor protection institutions seriously consider it. Under such a mechanism, the listed company reforms and survives; existing shareholders’ interests are safeguarded; the CSRC conserves substantial investigative resources; and investors receive rightful compensation (those who opt out to file individual lawsuits would likely recover no more—and at far greater cost in time and effort). All relevant institutions thus make significant contributions, and the pilot program for class actions achieves success. Conversely, another extreme scenario arises if the listed company refuses all cooperation, rendering class action indispensable to appease public outrage. In such cases, factors like the number of shareholders or market capitalization become irrelevant. Instead, defendants in the class action could include not only the listed company’s directors, supervisors, and senior management, but also securities firms, accounting firms, law firms, appraisal agencies, and credit rating agencies—all intermediaries involved. The ultimate consequence may extend beyond delisting to bankruptcy liquidation of the listed company, with personal assets of directors, supervisors, senior managers, and intermediary professionals potentially wiped out entirely. Such landmark cases would enter legal history. Class actions, after all, do not discriminate—and under the new Securities Law, every stakeholder must proceed with utmost caution, treading as if on thin ice. Listed companies risk delisting or bankruptcy; directors, supervisors, senior managers, and intermediaries face joint and several liability. Hence, companies contemplating listing must think thrice; individuals considering director, supervisor, or senior management roles at listed or pre-IPO companies must likewise reconsider; and providers of legal, auditing, appraisal, or credit rating services to listed companies must also pause and reflect. The once-easy path of accepting fees without scrutiny may no longer exist: even absent class actions, once a listed company lacks funds to compensate investors, the ever-present threat of joint and several liability will impose immense pressure on directors, supervisors, senior managers, and intermediaries. V. Recommendations from Securities Litigation Lawyers First, transitional and grace periods should be explicitly provided in judicial interpretations concerning special securities class actions and in detailed rules issued by investor protection institutions. Although class actions are civil proceedings, their punitive effect is profound—potentially more severe for listed companies than criminal liability. Prior to promulgation of the Securities Law, related judicial interpretations, and institutional rules, listed companies had no forewarning of such violations or any reasonable anticipation of potential legal consequences. Whether newly enacted rules should apply retroactively to all eligible claims warrants careful deliberation and balancing. Every detail implicates enormous interests—impacting the survival of listed companies, their shareholders, directors, supervisors, senior managers, and intermediaries. Extreme prudence is essential: rules must comply not only with statutory law, but also with legal principles—and must account for psychological factors and common sense.

Chemours Sues DuPont; Subsidiary Sues Parent—Uncovering a Series of Scandals!

Court documents allege that DuPont ‘orchestrated the spin-off of its Performance Chemicals Unit to form a new company named Chemours, as part of a deliberate strategy to mitigate its historical environmental liabilities.’ These documents were filed in Delaware state court and were originally intended to remain confidential. However, when Chemours’ attorneys failed to submit a publicly redacted version by the court’s deadline, the Associated Press petitioned the Delaware Supreme Court to unseal the documents—and the court did so, without modification. The documents state that in 2010, DuPont commissioned ‘a blue-ribbon panel composed of company managers, scientists, and engineers to devise a solution to this widely acknowledged problem.’ The company could have spent $60 million to completely halt emissions—or $20 million to reduce them by 70%. ‘But even the mildest recommended solution was too costly for DuPont,’ the court documents state. Instead, after installing a $2.3 million system that eliminated one wastewater stream, DuPont chose to shut down the system at the end of 2013—coinciding precisely with its announcement of plans to spin off Chemours, internally codenamed ‘Project Beta.’ Project Beta focused specifically on DuPont’s Performance Chemicals Unit—the very division responsible for ‘many of DuPont’s environmental liabilities,’ including those tied to PFAS chemicals such as GenX. The documents state: ‘Since this problem could conveniently be transferred to Chemours, why spend money solving it?’ And that is exactly what happened. This year, Chemours, North Carolina’s Department of Environmental Quality, and the Cape Fear River Watch entered into a consent order imposing a $12 million penalty on Chemours. The documents note that the consent order requires Chemours to adopt ‘the very same technology DuPont previously refused to install.’ When DuPont established Chemours as a subsidiary in spring 2015, it knew the Fayetteville plant had discharged PFAS into the Cape Fear River for over 30 years. Yet, in private internal discussions, DuPont assured Chemours that cleaning up the Fayetteville site’s contamination would cost no more than $2 million. That estimate now stands at approximately $200 million—not including potential fines from class-action lawsuits. Moreover, Chemours faces hundreds of millions of dollars in cleanup costs across multiple sites in New Jersey. DuPont also ‘shockingly’ underestimated the cost of resolving roughly 3,500 lawsuits. These suits were brought by residents near DuPont’s Washington Works plant in Ohio/West Virginia, whose drinking water had been contaminated with PFAS from plant wastewater discharges. ‘These are serious cases. Hundreds involve cancer patients; others suffer from other severe illnesses.’ DuPont engaged Deloitte to analyze potential litigation costs; Deloitte estimated DuPont would win 68% of the cases. ‘The remaining cases could be resolved relatively cheaply’—at $128 million, including defense counsel fees.

Robbins LLP Reminds Investors of Class Action Lawsuit Against Chemours Co

Oct 16, 2026

Robbins LLP notifies investors of a class action lawsuit against Chemours Co alleging overstated Opteon product demand misled fiscal 2026 guidance. Investors may file for lead plaintiff status by December 7, 2026.

GlobeNewswire

2026-08-06

California AG Accuses DuPont of Shell Game to Dodge PFAS Cleanup

2026-09-05

Chemours, DuPont found liable for PFAS contamination in North Carolina properties; jury trial set for March

2026-09-23

Environmental groups allege Chemours hasn't met PFAS limits agreement

2026-10-11

The Chemours Company Sued for Securities Law Violations

2026-10-12

Faruqi & Faruqi Reminds Chemours Investors of Securities Class Action Deadline