Wu Qing took charge of the China Securities Regulatory Commission for 100 days: more than 30 brokerages were fined, the black sheep were cleared, and A-shares stood at 3,100 points

Time Weekly

2024-05-16 16:28Published on the official account of Guangdong Times Weekly

Source of this article: Times Weekly Author: Huang Jiaxiang

Reporter Huang Jiaxiang

Since taking office as the new chairman of the China Securities Regulatory Commission, Wu Qing has been in this "crater" for 100 days.

On February 7, the China Securities Regulatory Commission changed its leadership, and Wu Qing, then deputy secretary of the Shanghai Municipal Party Committee, went to Beijing to take over as the tenth chairman of the China Securities Regulatory Commission. At that time, A-shares fell to the "freezing point", the Shanghai Composite Index hovered around 2,800 points, the market confidence was insufficient, and the market was full of expectations for its appointment.

As the first chairman of the China Securities Regulatory Commission to grow up in the securities regulatory system, Wu Qing has conducted intensive research and opened up his views since taking office, and the new regulatory idea of the capital market of "strict words first" has gradually surfaced. He stressed that regulators must attach great importance to the construction of the internal stability mechanism of the market, enhance the resilience of the market, adhere to the rule of law in the market, and build a loyal, clean and responsible regulatory iron army.

Since taking office, the capital market has set off a regulatory storm, "zero tolerance" to crack down on all kinds of violations of laws and regulations, more than 30 securities companies have received more than 100 fines, and many leading securities firms, including "three Chinas and one China", have been fined without exception, and some private equity and accounting firms have also been punished; Efforts have been made to crack down on financial fraud, fraudulent issuance and other violations of laws and regulations, and dozens of listed companies have been filed or punished by regulators.

During this period, a series of capital market policies were also released. On April 12, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", which consists of 9 parts. This is the first time in 10 years that the State Council has issued a guiding document on the capital market, known as the new "National Nine Articles".

Since the new "National Nine Articles", the capital market has started a new round of deepening reform, the "1+N" policy system has been gradually implemented, and the China Securities Regulatory Commission has issued a series of institutional rules, including strictly controlling the entry of issuance and listing, strengthening cash dividends, share reduction, quantitative trading, etc., and urging industry institutions to perform their duties and responsibilities.

On May 15, Wu Qing delivered a speech at the 2024 "5.15 National Investor Protection Publicity Day" event, saying that at present, the China Securities Regulatory Commission is thoroughly implementing the spirit of the Central Financial Work Conference, fully implementing the new "National Nine Articles", and solidly promoting the implementation of the "1+N" policy measures in the capital market. The core content is to promote strong supervision, risk prevention, and high-quality development in an integrated manner, strengthen the foundation, strictly supervise and strictly manage, and accelerate the creation of a safe, standardized, transparent, open, dynamic and resilient capital market. It is necessary to permeate investor protection in all aspects of the entire process of capital market system construction and supervision and law enforcement.

In the past 100 days of Wu Qing's new tenure, he should have taken decisive action to correct the market failure. The A-share market has rebounded significantly, and the Shanghai Composite Index has gradually recovered 3,000 points from 2,829.7 points when he took office, and has now stood at 3,100 points.

"Since the Chinese New Year, we have spoken to a lot of overseas investors, and their views on the Chinese market have become more positive. An important reason for this is that the regulator has launched a lot of measures to support the market more decisively. Lian Pei, director of UBS Greater China Research Department, told the Times reporter that for example, the "national team" entered the market to increase its holdings of A-share ETFs, which is a positive signal for foreign investors and strengthens their confidence; standardize the reduction of listed companies' holdings and more dynamically balance the liquidity of the primary and secondary markets; and guiding listed companies to better reward shareholders from the perspective of governance; These are all of great concern from the perspective of foreign investment. From the perspective of capital flow, funds have entered the Chinese market from the trend of Hong Kong stocks first and then A-shares.

More than 30 securities firms received 100 fines, and institutional supervision became stricter

Since Wu Qing took office, the normalized regulatory storm has hit, and brokerages have borne the brunt.

On May 14, the Shenzhen Stock Exchange released a number of regulatory documents, and the Shenzhen Stock Exchange issued a number of regulatory documents on the issues involving Jin Tongling (300091. SZ) decided to impose disciplinary sanctions on Dahua Certified Public Accountants and Huaxi Securities in the financial fraud case, and issued a notice of criticism to Everbright Securities, Soochow Securities and Guohai Securities. On the same day, the Jiangsu Securities Regulatory Bureau also updated a number of administrative regulatory documents, involving the above four securities firms.

The Shenzhen Stock Exchange imposed a "qualification penalty" on Huaxi Securities and Dahua Certified Public Accountants for temporarily not accepting documents for 6 months, and 2 sponsor representatives and 3 signing accountants were temporarily not accepted for 1 to 3 years. This is the first time under the registration system that the Shenzhen Stock Exchange has imposed a "qualification penalty" on sponsors and accounting firms that temporarily refuse to accept documents, which will affect the projects and practice services of the two intermediaries in the whole market.

On the same day, Bohai Securities announced that the China Securities Regulatory Commission decided to file a case against the company because it was suspected of violating laws and regulations in its financial advisory business.

Within 1 day, a number of brokerages received fines, which is a silhouette under the regulatory storm.

According to incomplete statistics from the Times Weekly reporter, as of May 15, the regulator has issued hundreds of fines to more than 30 brokerages. Successive chairmen of the China Securities Regulatory Commission will strengthen supervision after taking office, but this round of regulatory penalties has been significantly increased, and the top brokerages have basically been fined, including CICC, CITIC Securities, China Securities Construction Investment, Huatai Securities, Haitong Securities, Galaxy Securities, China Merchants Securities, Guotai Junan, etc.

Among them, three securities firms, Haitong Securities, CITIC Securities and Soochow Securities, were investigated for violations. CITIC Securities and Haitong Securities, which were involved in the "illegal private placement + securities lending case" of CNNC titanium dioxide, received huge fines.

From the perspective of the types of violations, many securities firms have many business compliance problems, mainly concentrated in the three major businesses of securities firms, such as investment banking, asset management, and brokerage; At the same time, problems such as over-the-counter options, proprietary investment, stock pledges, and employee stock speculation are frequent. In addition, there has been an increase in fines for violations involving investment banking business, and a decrease in the number of IPO sponsorship fines, most of which are fines for bond underwriting business.

At present, 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 concept, internal control and governance, investor protection, and information disclosure.

The new "National Nine Articles" emphasize strengthening the supervision of securities and fund institutions, promoting the industry to return to its origins, becoming better and stronger, promoting the high-quality development of securities and fund institutions, and handling the relationship between functionality and profitability.

The relevant person in charge of Ping An Securities told the Times Weekly reporter that this continues the previous requirements of the China Securities Regulatory Commission for correcting the positioning of industry institutions, and clearly guides securities and fund institutions to establish a correct business concept and handle the relationship between functionality and profitability. At the same time, it is pointed out that investment banking capacity and wealth management capacity building are the key directions of the institution.

Since Wu Qing took office, the regulator has also strengthened supervision over the controversial securities lending business, strictly prohibiting securities lending and borrowing in disguised T+0, and regulating quantitative trading; Intensify the enforcement of illegal private placements and futures, and recently filed a case for investigation of Ruifengda, a "runaway private placement".

Wu Qing stressed that industry institutions connect the two ends of investment and financing, and must devote more energy to serving investors. It is necessary to put functionality in the first place, correct the business philosophy, return to the origin, keep integrity and innovation, abide by fiduciary obligations, enhance professional capabilities, and provide investors with more diversified and more suitable products and services.

Cracking down on securities violations and crimes, and speeding up the elimination of "black sheep"

The wind of strict supervision has also blown to listed companies, and dozens of listed companies have been punished by regulators one after another.

On May 15, a number of listed companies such as Shilong Industrial, Jiabiyou, *ST Hongtu, Hengwei Technology, and ST Gaohong were punished by regulators, including ordering corrections, public punishments, issuing warning letters, and public reprimands.

There are also a number of listed companies that have been filed by the CSRC. Wind data shows that 12 listed companies have been filed since May. On May 8 alone, 8 listed companies, including ST Huatie, Weichuang Co., Ltd., Puli Pharmaceutical, Dongxu Optoelectronics, and Dongxu Blue Sky, received the "Notice of Case Filing" from the China Securities Regulatory Commission, of which 7 were suspected of failing to disclose annual reports on time and other information disclosure violations and violations.

In March this year, Wu Qing publicly stated that the China Securities Regulatory Commission would crack down on all kinds of violations of laws and regulations as soon as they appeared, and focus on cracking down on major violations in key areas. The new "National Nine Articles" also require that violations of laws and regulations in key areas such as financial fraud and capital occupation be strictly rectified.

Judging from the recently disclosed financial fraud case of Jin Tongling, the company and a number of relevant responsible persons, as well as the intermediaries involved, have been fined for financial fraud for 6 consecutive years; The China Nuclear Titanium Dioxide case was fined a total of 235 million yuan.

Wu Qing said that the CSRC has an unwavering attitude towards "zero tolerance" to crack down on securities violations and crimes. The China Securities Regulatory Commission will work with relevant parties to improve the judicial system and mechanism for securities law enforcement, accelerate the construction of a comprehensive punishment and prevention system for preventing and combating counterfeiting in the capital market, further improve the efficiency of administrative and criminal linkage, make lawbreakers pay a heavy price, and effectively maintain the order of the "three publics" in the market.

The delisting of A-shares has also increased significantly. On April 12, the China Securities Regulatory Commission issued the "Opinions on Strictly Implementing the Delisting System", and the exchange revised and improved the relevant delisting rules. The new rules add three types of normative delisting situations, including capital occupation, internal control audit opinions, and long-term disorderly struggle for control, which are known as the "strictest in history" new delisting rules.

Up to now, 9 A-share companies have completed delisting this year, more than 20 companies have locked in delisting, and dozens of ST companies are facing delisting risks. On May 6, five listed companies, *ST Sansheng, *ST Yuebo, *ST Tai'an, *ST Zuojiang and *ST Mid-term, were issued prior notices of stock termination by the Shenzhen Stock Exchange, all of which touched the financial forced delisting.

Wu Qing said that the "zombie enterprises" and black sheep will be resolutely cleared out of the market. As the "key minority", the controlling shareholders, actual controllers, and directors, supervisors and senior executives must stand up to the front and shoulder their responsibilities.

Problematic listed companies do not withdraw from the market, but pay more attention to the protection of investors' interests.

Wu Qing stressed the need to further consolidate the institutional foundation for investor protection. In the process of formulating and revising the system, we fully listen to the opinions and suggestions of investors, especially small and medium-sized investors, make objective and fair professional research and judgment, pay more attention to the fairness of the system, and provide investors with more substantive fair protection.

Guo Li, a professor at Peking University Law School, told the Times Weekly reporter that another important goal of the rule of law in the capital market is to more effectively protect the legitimate rights and interests of investors and promote the formation of a market ecology that respects and respects investors. It is necessary to adhere to the concept of "large insurance", so that all parties in the market can form a joint force, and accelerate the formation of an overall pattern of legal protection, regulatory protection, market protection, self-discipline protection and self-protection.

Strictly control the entrance and consolidate the responsibility of the "gatekeeper" of intermediaries

Strictly controlling IPO access and further consolidating the "gatekeeper" responsibilities of intermediaries is another major feature of Wu Qing after taking office.

The issuance of new shares has been a problem faced by successive SFC chairmen, who have made different decisions at different stages of the market, and have suspended IPOs several times in the past. After the implementation of the registration system, the pace of listing of enterprises has accelerated. Since 2018, more than 1,900 new listed companies have been added to the A-share market.

Since the second half of 2023, the pace of IPOs has begun to be tightened in stages. When the market was in a downturn this year, the market also called for a moratorium on IPOs, and how to grasp investment and financing, fairness and efficiency was a problem that Wu Qing faced after taking office.

After Wu Qing took office, he further raised the IPO threshold. After the promulgation of the new "National Nine Articles", the Shanghai and Shenzhen Stock Exchanges simultaneously issued the newly revised "Stock Listing Rules", which increased the net profit, cash flow and income indicators of the first and second sets of listing standards on the main board, and increased the market value and revenue scale in the third set of listing standards in the latest year. The GEM listing standards have also been enhanced.

At the same time, the China Securities Regulatory Commission (CSRC) has further strengthened on-site inspections, on-site supervision, and inspection and law enforcement in the field of new share issuance.

According to incomplete statistics, since 2024, more than 130 companies have terminated their IPOs. In addition, since February 19, the Shanghai, Shenzhen and Beijing Listing Committees have not had any new arrangements for the meeting, nor have there been any new acceptances, until the meeting of Marco Polo on May 16.

Wang Jiyue, a senior investment banker, told the Times Weekly reporter that the Shanghai Index has risen 20% since the low point of this year, the secondary market has gradually stabilized, and the supervision has not stopped the IPO.

The new "National Nine Articles" also mention the establishment of a retrospective accountability mechanism for review. Further consolidate the primary responsibility of issuers and the "gatekeeper" responsibilities of intermediaries, and establish a "blacklist" system for intermediaries. Adhere to the principle of "declaration is responsibility", and strictly investigate illegal issues such as fraudulent issuance.

Recently, a number of securities firms have stated that investment banks will actively respond to policy requirements, effectively play the role of "gatekeepers" in the capital market, and make positive contributions to improving the quality of listed companies, protecting the rights and interests of investors, and promoting the high-quality development of the capital market.

Ping An Securities told the Times Weekly reporter that the company will focus on its main business, become better and stronger, grasp the relationship between functionality and profitability, deeply practice the responsibility of "gatekeeper", integrate the concept of "protecting the legitimate rights and interests of investors" into various business scenarios, continue to improve the capacity building of investment banking and wealth management, and help the construction of a multi-level and high-quality capital market system.

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