Under the regulatory tone of "two strong and two strict", the fines of securities firms continue to increase. In the first week after the holiday, 3 more brokerages received fines.
According to incomplete statistics from Securities Times and Brokerage China reporters, since 2024, the regulatory authorities have issued a total of 62 fines against brokers, and more than 200 fines against securities practitioners. Judging from the types of 62 brokerage fines, 41 are warning letters, 14 are orders to correct, and the rest include case filing and investigation, suspension of business, etc.
Hualin Securities was issued a warning letter for information disclosure violations
On the evening of May 9, Hualin Securities announced that it received the "Decision on Administrative Supervision Measures" issued by the Tibet Securities Regulatory Bureau, and due to information disclosure violations, the Tibet Securities Regulatory Bureau took supervision and management measures to issue a warning letter to Hualin Securities, and recorded the relevant situation in the integrity file of the securities and futures market.
According to the decision, after investigation, Hualin Securities did not consider the risk signs in the Red Expo and Exhibition arbitration case in the performance forecast, and failed to accurately accrue business and management fees, resulting in a net profit attributable to the parent company of 172 million yuan to 218 million yuan in the 2023 annual report performance forecast, which is quite different from the net profit attributable to the parent company of 25 million yuan to 37 million yuan in the 2023 performance forecast revision announcement. According to the announcement, Lin Li, as the chairman of the company, and Zhu Song, as the general manager and chief financial officer of the company, are mainly responsible for the above behaviors.
In addition, after receiving the award from the Shanghai International Economic and Trade Arbitration Commission on February 18, 2024, Hualin Securities did not disclose it until February 27, 2024, which violated the relevant provisions of the Administrative Measures for Information Disclosure of Listed Companies. Lin Li, as the chairman of the company, Zhu Song, as the general manager of the company, and Xie Yingming, as the secretary of the board of directors of the company, failed to perform their duty of diligence and diligence in accordance with relevant regulations, and bear the main responsibility for the above acts.
Hualin Securities said that the company and related personnel attached great importance to it after receiving the "Decision", and will earnestly learn lessons in the future, further improve the awareness of standardized operation, improve the quality of financial information disclosure and the management level of information disclosure affairs, prevent similar situations from happening again, and effectively safeguard the interests of investors.
The sponsor verification work is not performing its duties and responsibilities properly
On May 8, the Shanghai Stock Exchange disclosed three fines to criticize Dalian Kelid Semiconductor Materials Co., Ltd. (hereinafter referred to as "Kelide"). After investigation, the company had violations such as inaccurate disclosure of relevant information on scientific and technological innovation attribute indicators and failure to fully explain the accuracy of cost accounting in the issuance and listing application. As the sponsor of the project, Haitong Securities and the two insurance agents were also criticized by the Shanghai Stock Exchange.
Three more brokerages have been fined!
According to the fine, the Shanghai Stock Exchange found that Haitong Securities had failed to perform its duties and responsibilities in the sponsorship verification work, and the first was that it did not fully verify the relevant information of the issuer's scientific and technological innovation attribute indicators, including the failure to fully verify the basis for the identification of R&D personnel and the accuracy of the amount of R&D investment; Second, the accuracy of cost accounting was not fully verified.
It is worth mentioning that Haitong Securities was previously taken regulatory measures by the Shanghai Stock Exchange on June 15, 2023 and January 29, 2024 respectively, and submitted a written rectification report.
In the on-site supervision of the Kelid project, the Shanghai Stock Exchange still found that there were weaknesses in the internal quality control of Haitong Securities' sponsorship business: first, the quality control and core opinions were not in place. The on-site supervision found that the quality control and kernel departments had paid attention to the issuer's R&D, cost and other aspects, but did not pay sufficient attention to whether some of the conclusions issued by the project team were supported by corresponding business data. Second, the effectiveness of on-site verification by the quality control department is insufficient. The on-site supervisor found that the quality control department had inspected the issuer's ERP system and carried out an independent voucher extraction procedure, but no relevant anomalies were found.
Employees "skip the line" to push products and use misleading wording such as "safety".
On May 6, the Xiamen Securities Regulatory Bureau issued two fines to the Xiamen branch of CICC Wealth Management Securities and related employees.
According to the fine, CICC Wealth Management Securities Xiamen Branch had three violations: first, the compliance management of all employees was not in place, and the company's employees actively promoted products with a risk level higher than their risk tolerance to investors in the process of serving customers; the second is to use one-sided wording that emphasizes the time limit of centralized marketing; Third, in the process of promoting private fund products, wording that may mislead investors in making risk judgments is used.
The Xiamen Securities Regulatory Bureau took the supervision and management measures of issuing a warning letter to the Xiamen Branch of CICC Wealth Management Securities. At the same time, the relevant employees of the branch were also issued warning letters. According to the fine, the employee actively recommended products with a risk level higher than his risk tolerance to investors in the course of serving customers; use one-sided wording that emphasizes the time constraints of focused marketing; Use wording such as "safe" and "annualized rate of return" to mislead investors in making risk judgments.
Strict supervision is carried out
Under the regulatory tone of "two strong and two strict", brokerage fines emerge in an endless stream.
Since the beginning of this year, 3 brokerages have been investigated for violations, and 1 brokerage has been suspended. Among them, Haitong Securities and CITIC Securities received huge fines for the "illegal fixed increase case" of China Nuclear Titanium Dioxide; Soochow Securities was placed on file for investigation on suspicion of failing to be diligent and conscientious in sponsoring the non-public issuance of shares of Gome Communications and Zixin Pharmaceutical; Huaxi Securities announced on April 12 that it was suspended from sponsorship for 6 months.
It is worth mentioning that investment banking business has become a key area of supervision since the beginning of this year. According to the reporter, since the beginning of this year, the China Securities Regulatory Commission, the stock exchange, local securities regulatory bureaus and other regulatory agencies have taken regulatory measures including China Securities Construction Investment, Guosen Securities, Haitong Securities, Dongxing Securities, CICC, Guotai Junan, Wanhe Securities, Zhongde Securities, CITIC Securities, SDIC Securities, Huaxi Securities and other nearly 30 brokerages.
From the perspective of the commonality of investment banking business fines, non-standard due diligence, failure to perform continuous supervision duties, and failure to supervise information disclosure have become high-frequency keywords for many securities firms to violate regulations.
It can be clearly seen that since the beginning of this year, it is not uncommon for employees to be punished with multiple penalties and heavy punishments in one case. For example, at the end of April, the former New Era Securities (now Chengtong Securities) was fined 11 times by the Beijing Securities Regulatory Bureau for failing to truthfully report the shareholding ratio of the actual controller to the regulator as required for a long time before the company was taken over, as well as imperfect internal control and chaotic operation and management. Zhongyuan Securities was also fined 8 times by the Henan Securities Regulatory Bureau for a number of violations such as compliance management and risk management.
In February this year, China Merchants Securities was heavily fined by the China Securities Regulatory Commission for violations of laws and regulations such as buying and selling stocks by a number of employees. Specifically, the first is to impose administrative penalties on 63 people, with a total fine of 81.73 million yuan, and impose a lifetime ban on 1 person from the securities market. The second is to transfer one person suspected of insider trading to the judicial authorities for handling. The third is to take administrative supervision measures against 46 people, of which 3 people are to be identified as inappropriate persons, 5 people will be subject to supervision talks, and 38 people will be issued warning letters. Fourth, China Merchants Securities, which is responsible for the management of employees, will take administrative supervision measures such as ordering an increase in the number of compliance inspections, issuing a warning letter to the chairman of the company and taking regulatory talks with the two then compliance directors, and urging China Merchants Securities to initiate internal accountability, interview relevant violators, and implement full accountability coverage.
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