On May 15, the China Securities Regulatory Commission (CSRC) released a summary of the CSRC's enforcement in 2023.
Since 2023, the China Securities Regulatory Commission has adhered to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, taken the study and implementation of the spirit of the Central Financial Work Conference as a major political task, and strengthened political guidance in accordance with the requirements of "comprehensively strengthening financial supervision", faithfully performed its duties and responsibilities, pooled the joint efforts of the system, and cracked down on all kinds of violations of laws and regulations with "zero tolerance". to provide a strong legal guarantee for the high-quality development of the capital market.
In 2023, the China Securities Regulatory Commission will investigate and prosecute 717 cases of securities and futures violations
In 2023, the China Securities Regulatory Commission will investigate and prosecute 717 cases of securities and futures violations, a year-on-year increase of 19%; 539 administrative penalties were imposed, a year-on-year increase of 40%, and 1,073 persons (families) were punished, an increase of 43% year-on-year; 103 people were banned from the market, a year-on-year increase of 47%; fines and confiscations of 6.389 billion yuan, a year-on-year increase of 140%; 118 cases and clues of suspected securities and futures violations and crimes were transferred to the public security organs, effectively maintaining the operation order of the capital market, effectively protecting the legitimate rights and interests of investors, and the effectiveness of cracking down on securities and futures violations continued to be demonstrated, and the "zero tolerance" crackdown on high-pressure posture was continuously consolidated.
The first is to keep a close eye on the "key minority", focus on eradicating the "cancer" of the capital market such as fraudulent issuance and financial fraud, and promote the improvement of the quality of listed companies.
Adhere to the principle of "declaration is responsibility". For issuers and intermediaries suspected of major violations of laws and regulations, even if they withdraw their applications for issuance and listing, they will insist on investigating to the end, put an end to "reporting with illness" and "entering from the mouth", and improve the quality of listed companies from the source. In 2023, 4 cases of issuers submitting false financial data at the issuance declaration stage will be investigated and dealt with, among which the IPO company Silxin on the Science and Technology Innovation Board will meet the issuance conditions, and the proportion of inflated profits in 2020 will reach 118%, which is the first fraudulent issuance case under the registration system that was discovered and investigated by the CSRC at the declaration stage, and the company and relevant responsible persons were fined 16.5 million yuan.
Adhere to system governance. Focusing on illegal acts such as abusing accounting policies and making large amounts of asset impairment to adjust profits, we will seriously investigate and punish 32 companies with bad circumstances, and crack down on illegal acts of financial fraud in the name of impairment. Dig deep into the chain of interests of financial fraud, and in view of the cross-correlation of the entities involved in many financial fraud cases, the high degree of similarity between suppliers and customers, and the cooperation of upstream and downstream fraud, we will conduct joint analysis, comprehensive investigation, and centralized investigation and handling, so as to effectively purify the ecosystem of listed companies.
Adhere to three-dimensional accountability. On the basis of increasing the intensity of administrative punishments, we will comprehensively use various means such as compulsory delisting, criminal liability, and civil compensation to comprehensively increase the cost of violating the law. In 2023, 32 of the listed companies investigated and dealt with by the CSRC have been forcibly delisted, and 42 listed companies suspected of crimes have been transferred to the public security organs. In the case of Zeda Yisheng and Amethystum storage fraudulent issuance, the company and the responsible person were fined 142.5 million yuan and 90.71 million yuan respectively by the China Securities Regulatory Commission, and the public security organs took criminal coercive measures against more than 10 responsible personnel, and both companies were forced to delist due to major violations, and investors received more than 1.3 billion yuan in civil compensation, forming a strong law enforcement deterrent to listed companies that dare to defy the law.
Adhere to precise accountability. Adhere to seeking truth from facts, do not indulge in vain, do not indulge in vain, do the punishment of excessive punishment, increase the punishment of the "first evil" and "key minority", and reduce the adverse impact on the company's operation as much as possible. For example, in the case of Qixin shares, Ye Mou, the actual controller of the company, instructed and instructed the company to engage in fraudulent issuance and information disclosure violations, and the China Securities Regulatory Commission imposed a fine of 14 million yuan on Ye and imposed a lifetime ban on entering the securities market. For cases of illegal occupation of guarantees, distinguish the main responsibilities of the listed company, the actual controller, directors, supervisors and other senior executives, and deal with them in a classified manner to avoid causing "secondary harm" to the company.
The second is to pay close attention to the lack of diligence and responsibility, tighten and consolidate the responsibility of "gatekeepers", and urge and guide intermediaries to improve the quality of practice.
Adhere to the principle of "multiple investigations in one case". On the basis of lawfully investigating and handling cases of fraudulent issuance, financial fraud, and other information disclosure violations, comprehensively verify the performance of duties and responsibilities of the intermediaries involved in the case, and seriously deal with those suspected of violating the law and committing crimes, and never tolerate them. For example, the whole chain cracked down on the illegal and dereliction of responsibility of the intermediaries involved in the private network communication series case and the Zixin Pharmaceutical financial fraud case, and the sponsoring, auditing, legal and other intermediaries related to the Gome Communications fraudulent issuance case were also held accountable.
Adhere to the "double penalty system". Strictly punish intermediary institutions that fail to perform their duties and responsibilities, and carry out "double punishments" on institutions and personnel in accordance with the law. In 2023, a total of 25 intermediaries and 94 practitioners will be administratively punished. In addition to the lawful application of "property penalties", make full use of legal empowerment to explore the application of "qualification penalties". If Zhongtian Huamao Certified Public Accountants fails to be diligent and conscientious in the audit practice of Oriental Netpower's annual report, the business income will be confiscated and a fine of 5 times will be imposed, and its securities service business will be suspended for 6 months; Sun, the person in charge of the Guohai Securities project who failed to provide services for the issuance of corporate bonds by Shengtong Group, was banned from entering the securities market for 5 years.
The third is to pay close attention to "internal and external collusion", "self-theft" and "habitual offenders", maintain a high-pressure law enforcement posture against illegal shareholding reduction, market manipulation, and insider trading, and actively create a fair, transparent and predictable trading environment.
Strictly investigate and quickly punish illegal shareholding reductions. Focusing on the chaos of major shareholders, especially controlling shareholders and actual controllers, in reducing their holdings in violation of regulations, we resolutely investigated and prosecuted 9 cases of illegal shareholding reduction. Among them, the actual controller of CNNC titanium dioxide conspired with CITIC CSI, CITIC Securities, and Haitong Securities to use securities lending and derivatives tools to reduce their holdings, strengthen penetrating supervision, and in accordance with the principle of substance over form, it was determined that relevant units and individuals jointly constituted restricted transactions in accordance with the law, and a total of 235 million yuan was fined.
Strictly crack down on internal and external collusion to manipulate stock prices. Strictly punish the actual controllers, directors, supervisors, and senior executives of some listed companies in accordance with the law for taking advantage of their capital, shareholdings, information, and other advantages to carry out market manipulation and other violations of laws and regulations that are of a vile nature and have a very bad impact in the name of market value management. In 2023, 9 cases of collusion between the actual controllers and executives of listed companies and foreign investors to manipulate the company's stock price will be investigated, and the relevant responsible units and personnel in the cases of Jintuo Shares, Senyuan Electric, and Newamstar will be fined 660 million yuan, 610 million yuan, and 95.67 million yuan respectively.
Severe punishment of repeat offenders and repeat offenders of market manipulation. Lawbreakers who have been punished for manipulating the market many times and have not yet stopped will be dealt with strictly and severely in accordance with the law. For example, Wang's copper gang manipulated 7 stocks before and after, and was fined 1.5 billion yuan by the China Securities Regulatory Commission and transferred to the public security organ for criminal responsibility; Ren Moucheng's gang manipulated many stocks, lasted for a long time, and involved a large amount of money, and was punished by the CSRC for 3 times, and the CSRC imposed a fine of 297 million yuan and took a lifetime ban on the securities market.
Investigate and handle new types of illegal cases from the facts. Use data-based analysis methods to crack down on new types of illegal acts in the capital market that are constantly mutating and escalating in accordance with the law, and resolutely curb the spread of the momentum. For example, in accordance with the law, some gangs used over-the-counter stock options and other financial derivatives to amplify and manipulate returns, and some personnel carried out illegal acts of manipulating LOF funds, convertible bonds and other varieties. Actively cooperate with the public security organs to investigate and prosecute illegal market manipulation by illegal gangs who use remote control software to hide transaction traces, quickly sell clearance-style smashing shipments, and seek huge illegal benefits.
Strictly investigate and deal with insider trading by key personnel. There are listed companies or acquirers of listed companies, or controlling shareholders, actual controllers, directors, supervisors, and senior executives of counterparties to major asset restructuring transactions of listed companies, who have forgotten their professional ethics, used their identities to facilitate access to inside information, and "guarded and stolen" themselves to illegally make profits, and must be severely punished. For example, Zhang, chairman of Shuzhi Technology, was fined more than 3,500 yuan for insider trading of the company's stocks, and was banned from the securities market for life; Huang, the director of the counterparty to the acquisition of Solton Development, was fined more than 5,000 yuan for insider trading. In addition, the China Securities Regulatory Commission (CSRC) has also seriously pursued the responsibility of public officials for using insider information to trade in a number of nest cases, such as "Three Gorges Water Conservancy" and "East China Science and Technology".
Fourth, we should pay close attention to bonds, private placements, futures and other fields, resolutely show our swords to illegal acts, and leave no dark and blind spots in financial supervision and law enforcement.
Resolutely crack down on violations of laws and regulations in the bond market. Strictly investigate and deal with the illegal information disclosure and misappropriation of funds hidden behind bond defaults. In 2023, 8 bond violation cases will be handled, involving 4 cases each in the exchange and interbank bond markets. If Evergrande Real Estate confirms the real estate sales revenue in advance, inflats the revenue and profits in 2019 and 2020, and causes the fraudulent issuance of 5 corporate bonds, it is proposed to impose a total fine of more than 4.2 billion yuan on the company and relevant responsible persons. The mortgage property disclosed by Yuegao Industrial and the mortgage registration were seriously inconsistent with the actual situation, and the company and related responsible persons were fined a total of 16 million yuan for failing to disclose the bankruptcy information applied to the court and the default of related bonds in a timely manner.
Intensify law enforcement against private placements and futures violations. In 2023, 29 private placement and futures cases will be handled, including misappropriation of fund assets, violation of the investor suitability system, violation of promised returns, illegal investment operations, and failure to disclose information in accordance with regulations. Pay close attention to relevant risk-related cases, such as 8 private equity institutions controlling multiple private equity institutions to nest investments with each other through covert methods such as equity holding, fictitious underlying targets and valuations, involving thousands of investors, and misappropriating tens of billions of yuan in private equity fund assets. A futures company failed to perform its management duties to its subsidiaries and failed to submit true, accurate and complete information, and was suspected of engaging in illegal financial activities.
Crack down on violations of laws and regulations by employees. Strengthen the management of employees, "crack down" on violations of laws and regulations, and strictly hold institutions accountable for ineffective management and control. Handled 61 cases of violations of laws and regulations by practitioners, covering illegal trading of stocks, privately accepting entrustment from clients, and fund practitioners using undisclosed information to trade. For example, it concentrated on investigating and prosecuting some employees of China Merchants Securities who bought and sold stocks and other violations of laws and regulations, imposed administrative penalties on 63 people, fined a total of 81.73 million yuan, and imposed a lifetime ban on 1 person from the securities market.
The focus of law enforcement work in 2024 is clear
In 2024, the China Securities Regulatory Commission will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 20th National Congress of the Communist Party of China and the Central Financial Work Conference, thoroughly implement the Several Opinions of the State Council on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market, and strictly crack down on illegal acts in the securities and futures market that seriously endanger the smooth operation of the market, infringe on the legitimate rights and interests of investors, have a bad social impact, and have a strong reaction from the public. Resilient capital markets are guaranteed.
The first is to strengthen the discovery of clues. Increase the application of scientific and technological supervision, continuously improve the sensitivity and accuracy of clue discovery, strengthen cross-departmental, cross-field and cross-market supervision cooperation, strengthen the linkage between on-site supervision and off-site supervision, information disclosure and transaction supervision, on-site inspection and inspection and investigation, and resolutely eliminate regulatory gaps and blind spots.
The second is to strictly investigate major cases. Focus on cracking down on fraudulent issuance, financial fraud, appropriation of guarantees, illegal shareholding reduction and other violations of laws and regulations, closely monitor and severely crack down on market manipulation, insider trading and other illegal acts that affect the normal order of the market, and provide an open, fair and just market order for investors to enter the market.
The third is to improve the efficiency of law enforcement. Strengthen the management of the whole process and cycle of case handling, strengthen process supervision, dynamic management, and control of key links, and effectively improve the quality of investigation and handling. Optimize the allocation of law enforcement forces, and quickly investigate and deal with major cases through modes such as "joint investigation", "training on behalf of cases", and "aid team leaders".
Fourth, we will continue to deepen cooperation. Give full play to the advantages of the mechanism of public security and procuratorial offices and convenient communication, and work with public security and procuratorial organs to centrally deploy and supervise the handling of cases. Strengthen the linkage with relevant ministries and commissions and local governments in areas such as information circulation, data sharing, and case handling, and form a work pattern in which each performs its own duties, organically connects, and works together to govern.
Fifth, pay attention to both punishment and prevention. Give full play to the functions of "punishment", "governance", "prevention" and "education" of inspection and law enforcement, let those who challenge the bottom line of the law pay the due price, and promote reform with punishment and management with punishment, so as to realize the conservation and restoration of the market ecology. Increase the transparency of law enforcement, promptly report on the handling of similar cases such as financial fraud and market manipulation, as well as typical cases, so as to achieve the effect of "handling one case, educating one, and warning one party".
Reviewer: Zhang Qinfeng Editor: Jiao Yuanyuan Proofreader: Yu Hongbo Producer: Li Ruoyu
Issued by: Sun Hong
