A reporter from the China Securities Journal learned from the website of the Beijing Securities Regulatory Bureau on April 30 that the Beijing Securities Regulatory Bureau decided to order China International Capital Corporation Limited (hereinafter referred to as CICC) to order an increase in the number of compliance inspections.
Image source: Beijing Securities Regulatory Bureau's official website
According to the Beijing Securities Regulatory Bureau, CICC had transactions between its own and investment advisory accounts, inadequate management of conflicts of interest, imprudent conduct of over-the-counter options business, inadequate management of its subsidiaries' business and investment behavior, and non-standard corporate governance.
According to the reporter's incomplete statistics, this is the fourth time that CICC has been named by regulators this year, and the second time it has been named by regulators in five days.
The company's internal control and governance are not in place, and the management personnel are punished at the same time
According to the Beijing Securities Regulatory Bureau, after investigation, CICC had transactions between its own and investment advisory accounts, inadequate management of conflicts of interest, imprudent conduct of over-the-counter options business, inadequate management of subsidiary business and investment behavior, and non-standard corporate governance, reflecting the company's failure to effectively implement compliance management and imperfect internal control, in violation of the first paragraph of Article 27 of the Regulations on the Supervision and Administration of Securities Companies (Decree No. 653 of the State Council) and the Article 3 of the Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies (Revised in 2020).
According to the Beijing Securities Regulatory Bureau, in accordance with the provisions of Article 70, Paragraph 1 of the Regulations on the Supervision and Administration of Securities Companies (Decree No. 653 of the State Council), the Beijing Securities Regulatory Bureau decided to take the following supervision and management measures against CICC: ordered CICC to conscientiously rectify the above problems, and to carry out internal compliance inspections every three months for one year from the date of the decision on supervision and management measures, and to submit a compliance inspection report to the Beijing Securities Regulatory Bureau within 10 working days after each inspection.
While naming CICC, the regulator also warned Ding Wei, an executive in charge of its subsidiary's business.
According to the Beijing Securities Regulatory Bureau, after investigation, CICC failed to manage the business and investment behavior of its subsidiaries, reflecting the company's failure to effectively implement compliance management and violating Article 3 of the Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies (Revised in 2020).
The Beijing Securities Regulatory Bureau said that Ding Wei, as a senior manager in charge of the above-mentioned business at the time, was responsible. In accordance with the provisions of Article 32, Paragraph 1 of the Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies (Revised in 2020), the Beijing Securities Regulatory Bureau decided to take supervision and management measures against Ding Wei by issuing a warning letter.
Image source: Beijing Securities Regulatory Bureau's official website
It is understood that Ding Wei used to be the chairman of CICC Capital, the executive chairman of the investment banking committee and the head of the investment banking department of CICC, and has now resigned.
Four fines have been collected this year
This is the fourth time that CICC has been named by the regulatory system this year.
The first time it was named was on January 8, when CICC, as the corporate bond trustee of Tahoe Group Co., Ltd., failed to pay necessary attention to the issuer's failure to disclose the relevant material debt overdue and litigation matters, and failed to disclose relevant material matters in the annual trustee management affairs report.
The second time it was named was on January 18, when the website of the Zhejiang Securities Regulatory Bureau showed that CICC had failed to establish a cash flow collection mechanism for underlying assets and failed to effectively prevent the cash flow of the special plan from being embezzled and misappropriated in the management of the special asset securitization plan.
The third time it was named was five days ago, on April 26, when CICC hired unqualified personnel to carry out relevant securities business in its compliance management, and that several employees had bought and sold stocks and lent personal securities accounts.
It is worth noting that this is the second time that CICC has been named by regulators for compliance issues. On the evening of April 7, 2021, CICC announced that Chen Gang, the company's compliance director, could not continue to perform his duties as compliance director due to physical reasons. Since December 2021, Zhou Jiaxing has served as CICC's Chief Compliance Officer.
Regulators continue to consolidate compliance responsibilities
The series of fines reflects the tightening of the regulatory standards of securities companies by the securities regulatory system. 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.
Shen Bing, director of the Securities and Fund Institutions Supervision Department of the China Securities Regulatory Commission, said at a press conference held on April 12 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 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.
Analysts believe that the recent successive issuance of heavy fines by the securities regulatory system reflects the deficiencies in internal control and compliance management of securities companies. The continuous release of strong regulatory signals also indicates that the trend of "strict supervision and strict management" of securities companies will continue, and at the same time, the legal awareness and responsibility awareness of intermediaries will be further enhanced.
Reviewer: Xu Zhao Editor: Wang Yin Proofreader: Zhang Diange
Producer: Zhang Nan Issued by: Fei Yangsheng