CCTV Beijing, April 19 News (Reporter Cao Qian, Intern Xie Xiaoxuan, Wang Kexin) In the past week, following Haitong Securities, CITIC Securities, and Soochow Securities, three securities companies have been investigated by the Securities Regulatory Commission, Huaxi Securities has been suspended from sponsoring for 6 months, and Galaxy Securities has been issued a warning letter by the Beijing Securities Regulatory Bureau.
On the evening of April 18, Donghai Securities, a securities company listed on the New Third Board, announced that the company was ordered to correct administrative supervision measures by the Jiangsu Securities Regulatory Bureau due to the unreasonable organizational structure of self-operated business risk control, the failure to complete the appointment and removal of supervisors of subsidiaries in a timely manner, and the failure to establish a sound underwriting risk assessment and treatment mechanism for some investment banking projects.
A number of experts interviewed by CCTV Capital Eye said that the regulators are strengthening the supervision of the securities industry, reflecting the determination of the regulators to strictly control the entrance of the securities market and further consolidate the responsibilities of intermediaries, and it is expected that the supervision of securities companies will continue to be strengthened in the future.
Experts believe that under the policy framework of the new "Nine Articles" and the revision of the "Provisions on Strengthening the Supervision of Listed Securities Companies", the mainland securities supervision is no longer "sporty", nor is it a regulatory "storm", but a normalized strict supervision and strong supervision, thereby promoting the high-quality development of the capital market.
In addition, according to the incomplete combing of the eyes of CCTV Capital, since 2024, more than 20 brokerages have been warned by regulators, ordered to correct, punished or filed, and the top 10 brokerages in terms of revenue in 2023 are "not spared". The problems related to inadequate compliance management, violations in the private placement sponsorship and related processes of listed companies, insufficient underwriting due diligence, and insufficient management of margin financing and securities lending business. Among them, the securities firm's false statement and private placement sponsorship violations are "hard-hit areas".
Within a week, 6 brokerages were filed or punished
On the evening of April 18, Donghai Securities received a decision issued by the Jiangsu Securities Regulatory Bureau ordering corrections.
The Jiangsu Securities Regulatory Bureau determined that the facts of violations of laws and regulations in Donghai Securities involved three major items.
First, in terms of comprehensive risk management, Donghai Securities has not established a multi-level, interconnected, and effective risk management operation mechanism. The organizational structure of risk control of self-operated business is unreasonable, risk management is not in place, the management of internal risk limits in equity business is not effectively implemented, and the operation of some fixed income business is not subject to effective checks and balances and supervision.
Second, from October 2020 to March 2021, Donghai Securities failed to complete the appointment and removal of supervisors of its subsidiary Donghai Investment Co., Ltd. in a timely manner.
Third, in some investment banking projects, Donghai Securities did not establish a sound underwriting risk assessment and handling mechanism, failed to conduct a strict review of the pricing basis of offline investors, failed to conduct bookbuilding and video recording as required, and wrote some investment value research reports without prudence and objectivity. Based on this, the Jiangsu Securities Regulatory Bureau took administrative supervision and management measures against Donghai Securities to order corrections. Donghai Securities shall conscientiously rectify and improve the level of compliance management, and submit a written rectification report to the Jiangsu Securities Regulatory Bureau within 15 days from the date of receipt of the decision.
According to incomplete statistics from the Central Broadcasting Capital Eye, Donghai Securities has been the sixth listed securities company to be filed or punished by the China Securities Regulatory Commission in the past week.
Since the promulgation of the new "National Nine Articles" and the revision of the "Provisions on Strengthening the Supervision of Listed Securities Companies" on April 12, Haitong Securities, CITIC Securities and Soochow Securities have been filed by the China Securities Regulatory Commission for violations of private placement sponsorship and private placement and reduction of shareholdings respectively; Huaxi Securities was also involved in private placement business violations and was punished and suspended from sponsorship for six months; and Galaxy Securities was issued a warning letter by the Beijing Securities Regulatory Bureau due to inadequate compliance management.
"In order to better build China's capital market with both political and people's nature, regulators are strengthening supervision of the securities industry. The regulator's determination to maintain market order and protect the rights and interests of investors is reflected in the 'zero tolerance' attitude towards brokerage violations, which leads to an increase in the cost of brokerage violations of laws and regulations. Tian Lihui, dean of the Institute of Financial Development of Nankai University, thinks.
From some data sections, it is not difficult to see that the China Securities Regulatory Commission has increased the punishment of securities companies for violations of laws and regulations.
According to the statistics of Lifang Public Opinion, since 2021, a total of 11 securities companies have been investigated by the CSRC for 12 incidents.
Now, in just one week, three securities firms have been filed by the CSRC. In fact, Soochow Securities is also the third securities company to be investigated since 2024.
Regarding the signs of the recent strict supervision of the brokerage industry, a number of experts interviewed by the eyes of CCTV Capital tend to believe that this is not a "storm" of strong supervision, but a normalized "two strong and two strict" supervision is being formed.
"Under the policy framework of the new 'National Nine Articles' and the revision of the Provisions on Strengthening the Supervision of Listed Securities Companies, the mainland securities regulation is no longer a 'sport', nor is it a regulatory 'storm', but a normalized strict supervision and strong supervision, thereby promoting the high-quality development of the capital market. Tian Lihui said.
This reflects the determination of the regulator to strictly control the entrance of the securities market and further consolidate the responsibilities of intermediaries. According to Zhou Yun, director of the state-owned capital operation research center of Shanghai National Accounting Institute, after the introduction of the new "National Nine Articles" and the revision of the "Provisions on Strengthening the Supervision of Listed Securities Companies", the regulators are bound to implement more targeted regulatory measures for brokers, and establish a normalized strict supervision mechanism to urge brokerages to establish a more effective internal control system to meet the needs of the high-quality development of the mainland capital market.
"The frequent rectification of supervision and regulation has an impact on the business of securities companies, which is reflected in the stricter review of IPO issuance, the more serious consequences of fraudulent issuance, and the underwriting and sponsorship business of securities companies will also be affected to a certain extent. However, this may be more beneficial for compliance management, risk management, and other businesses. Chen Siyuan, director of Guangdong Shenchao Law Firm, said.
The two "hardest hit areas" of brokerage violations
According to incomplete statistics from the Central Radio Capital, since 2024, the China Securities Regulatory Commission and the Shanghai and Shenzhen North Stock Exchanges have intensively rectified listed securities companies, and more than 20 securities firms have been warned by regulators, ordered to correct, punished or filed.
Specifically, Minsheng Securities, Huaan Securities, Hualong Securities, Fed Securities, Zhongtai Securities, Yuekai Securities, Hualin Securities, Guosheng Securities, SDIC Securities, Guosen Securities, Zhongde Securities, Dongxing Securities, Founder Securities, Huaxi Securities, etc. are all involved. At the same time, CITIC Securities, Huatai Securities, Guotai Junan, Galaxy Securities, GF Securities, China Securities Construction Investment, CICC, Haitong Securities, Shenwan Hongyuan, China Merchants Securities and other top 10 brokerages in terms of revenue in 2023 are "not spared".
"In order to pursue short-term performance, some securities companies have relaxed their supervisory responsibilities, and even conspired with some inferior enterprises to engage in violations, infringing on the interests of investors and disrupting the normal order of the securities market. Zhou Yun commented.
According to the eyes of CCTV Capital, many of the problems that the above-mentioned securities firms have been filed or dealt with involve inadequate compliance management, violations in the private placement sponsorship and related processes of listed companies, insufficient underwriting due diligence, and insufficient management of margin financing and securities lending business. Among them, the securities firm's false statement and private placement sponsorship violations are "hard-hit areas".
Chen Siyuan believes that if a securities firm fails to fulfill its duty of diligence during the continuous supervision of the sponsor institution, it should be held liable, and its responsibility in the case of misrepresentation cannot be shirked.
According to the provisions of the Securities Law, securities firms shall be diligent and conscientious in accordance with the relevant business rules to ensure that the documents produced and issued are true, accurate and complete when preparing and issuing relevant documents for securities business activities such as the issuance, listing and trading of securities.
"If a securities firm fails to fulfill its duty of diligence and diligence, or if there are false records, misleading statements or material omissions in the documents produced or issued, etc., causing losses to investors, it shall be jointly and severally liable for compensation. Chen Siyuan said.
In Tian Lihui's view, securities firms are frequently punished for misrepresentation and private placement sponsorship violations, because regulators have put forward higher requirements for the compliance of brokerage businesses, especially investment banking business.
"The compliance issues of securities firms in the private placement sponsorship business have been strictly monitored, and the research and reporting business of securities firms has also become the focus of supervision. Regulators conducted large-scale spot checks on the compliance of research reports and found a number of problems, which led to a series of penalties. Tian Lihui said.
The situation of "strict supervision and strict management" of securities companies continues
Since March, under the new regulatory concept of "two strong and two strict", the regulator has frequently expressed its stance and continued to release the signal of "strict supervision and strict management" of securities firms.
On April 12, Wu Qing, chairman of the China Securities Regulatory Commission, mentioned strong supervision when interpreting the new "National Nine Articles" of the capital market, saying that he would build a comprehensive and three-dimensional capital market supervision system and fully implement the supervision of "long teeth and thorns", with edges and corners.
Wu Qing pointed out that institutional supervision should promote the return to the origin, be better and stronger, further consolidate the responsibility of "gatekeeper", guide various industry institutions such as securities and futures funds to correct their business philosophy, and improve their compliance level, professional service capabilities and core competitiveness.
On the same day, the China Securities Regulatory Commission (CSRC) revised the Provisions on Strengthening the Supervision of Listed Securities Companies and solicited public comments. The new requirements mainly involve four aspects: first, the people's position should be clearer, second, the development concept should be more advanced, third, compliance and risk control should be stricter, and fourth, information disclosure should be more transparent.
Shen Bing, director of the Department of Supervision of Securities and Fund Institutions of the China Securities Regulatory Commission, pointed out that from the perspective of regulatory practice in recent years, listed securities companies are still facing the problem of "big but not strong", and there is still a big gap between them and the standards and requirements of first-class investment banks and investment institutions in terms of development concepts, investor protection, internal control and governance, and information disclosure.
Shen Bing said that this revision highlights goal-oriented and problem-oriented, and revises and improves the "Regulations" from the aspects of optimizing the development concept, strengthening investor protection, improving internal control governance, and improving information disclosure, with the aim of urging listed securities companies to become "leaders" and "pacesetters" in the high-quality development of the industry by strengthening supervision.
For the continuous release of strong regulatory signals, many market participants expressed their confidence and expectations for the industry.
Liu Zhigeng, a well-known financial and tax auditing expert, believes that once a brokerage company fails to play the role of "leader" and "gatekeeper", it may not only deviate from itself, but also lead other intermediaries to the wrong and wrong way, and fail to control and control it well.
"In the future, I believe that the China Securities Regulatory Commission will continue to strengthen supervision of securities companies involved in businesses that may seriously affect the securities market, seriously damage the interests of investors, and are prone to various violations of laws and regulations. Liu Zhigeng said.
"This is conducive to transmitting the responsibility of maintaining the market to the relevant entities, and further enhancing the legal awareness and responsibility awareness of intermediaries. It will help improve the quality of information disclosure of listed companies and reduce financial fraud. Chen Siyuan's views tend to be the same.
On March 15, the China Securities Regulatory Commission issued the "Opinions on Strengthening the Supervision of Securities Companies and Public Funds and Accelerating the Construction of First-class Investment Banks and Investment Institutions", which proposed that it is necessary to strictly implement the requirements of "declaration and responsibility", establish and improve the practice negative list and integrity file management system, and further consolidate the responsibility of investment banks as "gatekeepers";
On March 6, Wu Qing proposed at the press conference on the economic theme of the second session of the 14th National People's Congress that in order to promote the healthy development of the capital market, regulators should pay special attention to the issue of fairness, and regard openness, fairness, and justice as the most important market principles, which is the embodiment of the people's nature and politics of capital market supervision. The IPO listing of enterprises must not be for the purpose of collecting money, let alone fraudulent listing. Protecting the legitimate rights and interests of investors, especially small and medium-sized investors, is the core task of the CSRC.
At that time, Zhu Jian, Secretary of the Party Committee and Chairman of Guotai Junan Securities Co., Ltd., paid attention to the fact that Chairman Wu Qing clearly pointed out the crux of the current market operation, clarified the main line of "strengthening supervision, preventing risks and promoting development" in the next step, and once again emphasized the political and people's nature of financial work, which not only pointed out the direction of deepening the reform of the capital market, but also provided clear guidance for the future development of the securities industry.
Zhu Jian believes that we should take the initiative to adapt to the requirements of "strict supervision and strict management", comprehensively build the three lines of defense of "business units, compliance risk control, and audit and audit", and promote the formation of a compliance risk management and control system with a complete system, unified standards, hierarchical management, efficient communication, and strong supervision, so as to firmly guard the bottom line of no systemic financial risks. (CCTV Capital Eye)
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