Consolidate the responsibilities of intermediary institutions and urge securities companies to fulfill their responsibilities.
On the evening of October 14, Haitong Securities announced that the company received the Administrative Penalty Decision letter from the Chongqing Securities Regulatory Bureau. In response to the case of Haitong Securities failing to exercise due diligence in the process of continuous supervision of Allred in 2017, the Chongqing Securities Regulatory Bureau conducted a case investigation and trial of Haitong Securities' violation of securities laws and regulations, and the investigation and trial have now been concluded.
The Chongqing Securities Regulatory Bureau ordered Haitong Securities to make corrections, confiscated 1 million yuan of financial consulting business income, and imposed a fine of 3 million yuan; Li Chun and Jia Wenjing, the independent financial consultant sponsors of Allred's continuous supervision period at the time, gave warnings and imposed fines of 50,000 yuan each.
Haitong Securities said: "The company will continue to follow a sound business philosophy, further strengthen the internal control mechanism of investment banking business, improve the awareness of standardized operation, comprehensively improve the compliance risk management level of investment banks, and earnestly fulfill its obligations of diligence and due diligence." ”
Continued supervision failed to exercise due diligence, and Haitong Securities was fined 4 million yuan
On the evening of September 28, Haitong Securities announced that it had received the "Advance Notice of Administrative Penalties" from the Chongqing Securities Regulatory Bureau. Now that the official "Administrative Punishment Decision Letter" has landed, Haitong Securities' 2017 Irid continuous supervision failure to exercise due diligence has finally come to an end.
According to the Administrative Penalty Decision of Chongqing Securities Regulatory Bureau, Haitong Securities was the independent financial adviser of Southwest Pharmaceutical for major asset restructuring and supporting funds in 2015, and after the implementation of major asset restructuring in 2015, Southwest Pharmaceutical was renamed Allred Optoelectronics Co., Ltd. (hereinafter referred to as Allred).
The "Administrative Penalty Decision" shows that in the process of implementing Allred's continuous supervision in 2017, Haitong Securities did not pay sufficient attention to Allred's illegal external guarantee matters, only carried out procedures such as inquiring and inspecting the records of the "three meetings" and using the seal records, did not obtain the current Allred corporate credit report and saved it in the working paper of Allred continuous supervision, and did not conduct the necessary review and review of the current Allred enterprise credit report, resulting in the failure to find that Allred provided guarantees to the outside world in violation of the law. O'Red's disclosure of information was not found to be missing.
In the case that Allred and its subsidiaries were involved in private lending matters and violated laws and regulations, Haitong Securities did not maintain reasonable professional doubts to fully verify and verify the private lending matters involving Allred when Allred had announced that the company and its subsidiaries were involved in a loan dispute, and only obtained internal evidence such as written statements issued by Allred's board of directors, did not obtain external objective evidence such as relevant loan contracts, complaints, and relevant legal documents of the court, and did not perform the work procedures for verification to third parties such as courts and case agent lawyers. Failure to retrieve relevant case information through public channels such as the court trial open network led to the failure to discover that Allred had not disclosed its relevant major loan contracts in accordance with the law and that the actual controller had occupied Allred funds.
Allred did not record the borrowed funds involved in the above-mentioned loan dispute in the financial books, its 2017 annual financial statements contained false records, and did not perform the temporary information disclosure obligation in accordance with the relevant legal provisions on major matters such as related borrowings, related party transactions that provided funds to controlling shareholders and actual controllers, and provided external guarantees in violation of regulations, nor did it disclose the above matters in the 2017 annual report. Haitong Securities did not fully perform its continuous supervision obligations, failed to exercise due diligence, and falsely recorded the 2017 Annual On-Site Inspection Report and the 2017 Continuous Supervision Opinion issued on May 2, 2018 and disclosed by Allred on May 4, 2018.
The Chongqing Securities Regulatory Bureau held that the above-mentioned acts of Haitong Securities violated Article 173 of the 2005 Securities Law and constituted the circumstances described in Article 223 of the 2005 Securities Law. At that time, Li Chun and Jia Wenjing, the independent financial advisers of Allred's continuous supervision period, were directly responsible executives.
Based on the facts, nature, circumstances and degree of social harm of Haitong Securities' illegal acts, and in accordance with the provisions of Article 223 of the 2005 Securities Law, the Chongqing Securities Regulatory Bureau made the following decisions: First, order Haitong Securities to make corrections, confiscate 1 million yuan of financial consulting business income, and impose a fine of 3 million yuan; second, give Warnings to Li Chun and Jia Wenjing, and impose fines of 50,000 yuan each.
Under the registration system, the "gatekeeper" needs to be more diligent and conscientious
The reform of the registration system is currently a "bull nose" project to comprehensively deepen the reform of the capital market. Since the beginning of this year, regulators have raised the substantive requirements for the attribution of the responsibilities of intermediary "gatekeepers". In the context of steadily promoting the reform of the registration system, it is urgent to consolidate the responsibilities of intermediary institutions, not only sponsoring institutions, but also intermediary institutions such as law firms and audit evaluations should also take the initiative to fulfill their responsibilities and form a practice concept and professional ability that matches the registration system as soon as possible.
In fact, since the beginning of this year, the regulatory and policy levels have introduced a series of measures to improve the quality of intermediary institutions' practice. On July 9, the China Securities Regulatory Commission (CSRC) formulated and issued the Guiding Opinions on Urging Securities Companies to Engage in Investment Banking Business under the Registration System, Strengthening the Supervision of Investment Banking Business, Further Improving the Workflow and Work Standards of Investment Banking Business Supervision, Further Strengthening Supervision and Law Enforcement, Consolidating the Responsibilities of Intermediary Institutions, Strengthening Three-Dimensional Accountability, and Establishing and Improving Constraint and Incentive Mechanisms such as Quality Evaluation, Giving Full Play to the Role of Corporate Autonomy and Marketization Mechanisms, and Promoting Securities Companies to Take the Initiative to Return to Their Responsibilities.
On August 23, the General Office of the State Council issued the Opinions on Further Standardizing the Order of Financial Auditing and Promoting the Healthy Development of the Certified Public Accountants Profession, which pointed out that the supervision of accounting firms engaged in securities business should be strengthened in accordance with the law.
On the evening of September 16, the CSRC announced that it would take the lead in establishing a coordination working group to combat illegal activities in the capital market (hereinafter referred to as the coordination group), and successfully held the first meeting of the coordination group. The meeting put forward four requirements for the members of the coordination group from the level of working mechanism, legal responsibility system and other levels, pointing to financial fraud, market manipulation, insider trading and other violations of laws and regulations.
Market participants pointed out that this year, various departments issued a number of opinions to improve the quality of intermediary practice, releasing a strong signal that the regulatory authorities will implement the new securities law, consolidate the responsibilities of intermediary institutions, strengthen the supervision of intermediary institutions, and regulate the behavior of intermediary institutions. This is conducive to forcing intermediary institutions to be diligent and conscientious, and at the same time, it also plays a positive role in improving the quality of listed companies, ensuring the compliance of the behavior of participating entities in the capital market, and maintaining market order and investors' rights and interests.
Some insiders pointed out that the sponsoring institution should increase the management and training of front-line business personnel, urge business personnel to update business knowledge in a timely manner, practice internal skills, and comprehensively enhance professional capabilities; on the other hand, sponsoring institutions should strictly implement the relevant requirements of the internal control guidelines for investment banking business, strengthen the quality control, core project approval, declaration and other whole-process control mechanisms, and give full play to the respective roles of the "three lines of defense".
Another expert said that the implementation of the new securities law and the steady implementation of the stock issuance registration system have injected new momentum into the rapid development of the investment banking business, and also brought about the reset of the investment banking business model, and securities companies should implement the responsibility requirements of the regulatory authorities for verification and control in the process of issuance and listing on the basis of adhering to the business origin.
Editor-in-charge: Wang Yunpeng