At the end of last year, Jin Tongling (300091. SZ) Technology Group Co., Ltd. (hereinafter referred to as "Jin Tongling") was found to have committed financial fraud for 6 consecutive years. Recently, the other responsible parties around the incident have intensively opened the "post-autumn accounting".
On May 14, the Jiangsu Securities Regulatory Bureau disclosed seven decisions on administrative regulatory measures on the same day, involving Everbright Securities (601788. SH), Guohai Securities (000750. SZ), Soochow Securities (601555. SH) and Huaxi Securities (002926.SZ), the penalties involve bond issuance, private placement, mergers and acquisitions and other links. On the same day, the Shenzhen Stock Exchange also announced the disciplinary decision of the four brokerages.
The China Securities Regulatory Commission and the exchange "shot" on the same day
According to the documents issued by the Jiangsu Securities Regulatory Bureau on May 14, although several securities firms have been involved in Jin Tongling's financial fraud for six consecutive years, the specific matters of punishment are different.
Guohai Securities was verified that in the process of Jin Tongling's non-public issuance of shares in 2017 to perform its continuous supervision duties, it failed to perform relevant obligations diligently, and the 2017~2019 continuous supervision on-site inspection report issued during the continuous supervision period had false records, and the external release procedures of the continuous supervision report did not comply with the regulations.
Everbright Securities failed to fully perform its verification obligations in the process of performing its continuous supervision duties in the project of issuing shares to purchase assets and raising supporting funds in 2018, and failed to conduct necessary prudent verification by using the professional opinions of other securities service institutions, resulting in false records in the 2018~2020 continuous supervision opinions prepared and issued.
Soochow Securities failed to be diligent and conscientious in the non-public issuance of bonds in Jin Tongling's 2021 non-public issuance of bonds, and there were insufficient follow-up and implementation of core opinions and imperfect working papers.
The above-mentioned three securities firms and the staff directly responsible for the relevant projects were all taken by the Jiangsu Securities Regulatory Bureau to issue warning letters.
At the same time, the documents disclosed by the Jiangsu Securities Regulatory Bureau show that Huaxi Securities was suspended from sponsorship business for 6 months between April 28 and October 27, 2024. Two sponsor representatives of Huaxi Securities were taken the regulatory measures of not holding positions related to the securities issuance and listing sponsorship business of securities companies for two years or actually performing the above duties, and two sponsor representatives of the sponsor project were taken to issue warning letters.
Also on May 14, the Shenzhen Stock Exchange issued penalties for these four brokers.
The penalties against Huaxi Securities are the most severe. According to the documents disclosed on the official website of the Shenzhen Stock Exchange, the Shenzhen Stock Exchange decided to give Huaxi Securities a punishment of not accepting the issuance and listing application documents and information disclosure documents submitted by it for six months, and the two sponsor representatives of Jin Tongling's 2020 stock issuance project to specific targets were given the punishment of not accepting the issuance and listing application documents and information disclosure documents signed by them for two years, and at the same time gave Huaxi Securities and two sponsor representatives the punishment of public reprimand.
As the sponsor representative of Jin Tongling's continuous supervision of the issuance of shares to specific targets in 2020, two staff members of Huaxi Securities were also punished by the Shenzhen Stock Exchange for circulating criticism.
The persons in charge of the relevant projects of Guohai Securities, Everbright Securities, Soochow Securities and the three securities companies were all given the punishment of circulating criticism by the Shenzhen Stock Exchange.
Accounting firms were also penalized
In addition to brokers, as the auditor of Jin Tongling's annual financial statements from 2017 to 2022, Dahua Certified Public Accountants (hereinafter referred to as "Dahua") has also been punished recently.
According to the official website of the Jiangsu Securities Regulatory Bureau, Dahua failed to be diligent and conscientious when auditing Jin Tongling's annual financial statements from 2017 to 2022, and the audit report issued by it contained false records. The total audit income of the 3 signed certified public accountants for 6 years is 6.8868 million yuan (excluding tax).
The Jiangsu Securities Regulatory Bureau decided to order Dahua to make corrections, confiscate business income of 6.8868 million yuan, impose a fine of 34.434 million yuan, and suspend the securities service business for 6 months. The three signatory CPAs were given warnings and fined a total of $2.7 million.
It is worth noting that the administrative penalty decision shows that Hu Zhigang, the signing accountant of Dahua Law Firm, as the signing certified public accountant of Jin Tongling's 2017 audit report, has passed the statute of limitations for administrative punishment, but he is still subject to administrative punishment measures such as warnings and fines.
The Shenzhen Stock Exchange also issued a fine to Dahua. On May 14, the Shenzhen Stock Exchange issued a document stating that it decided to impose a six-month penalty on Dahua for not accepting documents related to its securities business and securities service business due to the financial fraud of Jin Tongling and the three signatory certified public accountants. The two signatory certified public accountants, Fan Rong and Yan Lisheng, were given the punishment of refusing to accept the documents related to the securities business and securities service business issued by them for 36 months. Hu Zhigang, the signing certified public accountant, was given the penalty of not accepting the documents related to the securities business and securities service business issued by him for 12 months.
UOB and the three signatory CPAs were also given public reprimands.
The punishment of Huaxi Securities and UOB is the first time that the Shenzhen Stock Exchange has imposed a "qualification penalty" on sponsors and accounting firms that will not be accepted for the time being since the registration system will be fully opened in 2023.