The CSRC announced on Chinese New Year's Eve to punish China Merchants Securities: many people violated the rules and issued a warning letter to the chairman
Due to a number of employees trading stocks and other violations of laws and regulations, China Merchants Securities (600999. SH) was dealt with by the Securities and Futures Commission.
On February 9, the official website of the China Securities Regulatory Commission announced that recently, the China Securities Regulatory Commission organized inspection and law enforcement and daily supervision forces to investigate and deal with violations of laws and regulations such as stock trading by a number of employees of China Merchants Securities, and emphasized that it is necessary to rely on criminal accountability, administrative punishment, administrative supervision measures, and internal accountability to carry out three-dimensional punishment of China Merchants Securities.
In the face of the serious accountability of the regulatory authorities, China Merchants Securities responded that China Merchants Securities actively cooperated with the regulatory authorities during the investigation, expressed firm support for the above-mentioned punishment decision, and will seriously hold the employees involved accountable.
China Merchants Securities said that in order to implement the requirements of laws and regulations and the company's system to prohibit employees from trading stocks, China Merchants Securities has started with the education of new employees, requiring all employees not to open securities accounts to buy and sell stocks in violation of regulations, and has also strengthened control through securities account monitoring and audit on a daily basis. "The violations of laws and regulations of the employees involved were concentrated before 2021 and were held under pseudonyms, reflecting that the company's daily education was still not in place in the past, the management system was still lacking, and the supervision and accountability were not strong enough. We will deeply learn from the lessons and resolutely and thoroughly rectify the situation. ”
The chairman of the board of directors was issued a warning letter
According to the announcement, the CSRC's punishment includes five major aspects: first, administrative penalties were imposed on 63 people, with a total fine of 81.73 million yuan, and a lifetime ban on entering the securities market was imposed on 1 person; second, one person suspected of insider trading was transferred to the judicial authorities for processing; third, administrative supervision measures were taken against 46 people, of which 3 people were to be identified as unsuitable persons, and 5 people were to be subject to regulatory talks. 38 people took the administrative supervision measures of issuing warning letters, and the fourth was to take administrative supervision measures such as ordering China Merchants Securities to increase the number of compliance inspections for China Merchants Securities, which was responsible for the management of employees, and administrative supervision measures such as issuing warning letters to the chairman of the company and taking regulatory talks with 2 then compliance directors, and urging China Merchants Securities to initiate internal accountability, interview relevant violators, and implement full coverage of accountability.
The Paper noted that on the same day, the Shenzhen Securities Regulatory Bureau also issued more than 15 "Decisions on Administrative Regulatory Measures" (hereinafter referred to as the "Decision"), many of which involved China Merchants Securities, and also disclosed more details. The "Decision" pointed out that after investigation, a number of employees of China Merchants Securities had borrowed other people's securities accounts to trade stocks for a long time, privately accepted customer entrustment to trade stocks, entrusted others to speculate in stocks and other violations of laws and regulations, among them, Huo Da, as the chairman of China Merchants Securities, had management responsibility for the above issues, Zhao Bin, as the then compliance director of China Merchants Securities, and Hu Yu, as the current compliance director, had management responsibility for the relevant violations. In the end, the Shenzhen Securities Regulatory Bureau decided to take administrative supervision measures such as issuing a warning letter to Huoda, and administrative supervision measures to supervise Zhao Bin and Hu Yu.
The Shenzhen Securities Regulatory Bureau also issued a "Decision on Ordering China Merchants Securities to Increase the Number of Internal Compliance Inspections". After investigation, a number of employees of China Merchants Securities have borrowed other people's securities accounts to trade stocks for a long time, privately accepted customers' entrustment to trade stocks, and entrusted others to speculate in stocks, and other violations of laws and regulations, which were mainly concentrated before 2021.
According to the Shenzhen Securities Regulatory Bureau, during the aforementioned period, China Merchants Securities had the following problems in the management of employees' behaviors: first, insufficient attention and accountability to employees' stock trading behaviors; second, the monitoring and management of employees' behaviors were not in place; and third, the construction of supporting information technology systems was insufficient.
The Shenzhen Securities Regulatory Bureau further pointed out that the above problems reflected the inadequate compliance and internal control management of China Merchants Securities, and the Shenzhen Securities Regulatory Bureau decided to take administrative supervision measures against China Merchants Securities to order an increase in the number of internal compliance inspections. During the period from January 2024 to December 2024, internal compliance inspections will be conducted on a quarterly basis, and a compliance inspection report will be submitted to the Shenzhen Securities Regulatory Bureau within 10 working days after each inspection.
"Crack down on violations"
The CSRC emphasizes that it is a basic requirement of the Securities Law that securities practitioners are not allowed to buy or sell stocks.
"In recent years, I will severely crack down on the illegal trading of stocks by securities practitioners. From 2019 to 2023, a total of 67 cases of illegal stock speculation by practitioners were investigated and handled, and administrative penalties were imposed on 139 people, focusing on building a long-term mechanism of 'dare not, can't, and don't want to' illegal stock trading. The China Securities Regulatory Commission said that in the next step, it will adhere to systematic thinking, draw inferences from one example, continue to strengthen institutional supervision, behavior supervision, functional supervision, penetrating supervision, and continuous supervision, and cooperate with industry associations to continue to carry out a number of work.
The first is to improve the system and mechanism. Formulate a special rectification work plan to strictly crack down on illegal stock speculation by securities practitioners in accordance with the law, consolidate the main responsibilities of institutions, urge securities companies to strengthen internal monitoring, self-examination and self-correction and accountability mechanisms, implement compliance management for all employees, and realize the integrated vertical management of all branches and employees, and each securities regulatory bureau will carry out special on-site inspections. Improve the rules for the management of employees' investment behavior, urge institutions to improve the internal control system for investment declaration, review, monitoring, punishment, etc., improve the investment behavior management mechanism, and further plug the loopholes in the regulatory system and implementation of securities practitioners.
The second is to strengthen supervision and law enforcement. "Crack down on violations", strictly hold accountable institutions with ineffective control, strengthen a three-dimensional punishment system for violators, build a punishment mechanism of "one violation, everywhere restricted", strengthen the notification and warning of violations, and carry out special governance actions.
The third is to continue to purify the industry ecology. Adhere to the "two combinations", carry out in-depth comprehensive management of industry culture construction, and urge institutions to effectively achieve "not exceeding the bottom line, not seeking profit, not rushing for quick success, not detaching from reality to virtuality, and not acting recklessly", and adhere to honesty and trustworthiness, righteousness and profit, prudence, integrity and innovation, and compliance with laws and regulations. Improve the basic norms and codes of conduct for practitioners, establish and complete a system of classified lists of practitioners and mechanisms for managing professional reputation, and accelerate the formation of an atmosphere of "strict" management of practitioners.