CFIC Introduction
Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the Opinions thoroughly implement the spirit of the 20th National Congress of the Communist Party of China, conscientiously implement the spirit of General Secretary Xi Jinping's important instructions on the reform and development of the capital market, adhere to the general tone of seeking progress while maintaining stability, adhere to the direction of marketization and rule of law, further intensify the crackdown on financial fraud, improve the regulatory coordination mechanism, build a long-term mechanism for the prevention and control of financial fraud, increase system supply, strengthen incentives and constraints, and provide strong support for promoting the high-quality development of the capital market.
Original title: The latest blockbuster of A shares! Beijing, 5 Jul (Xinhua) -- A few days ago, the General Office of the State Council forwarded the "Opinions on Further Doing a Good Job in the Comprehensive Punishment and Prevention of Financial Fraud in the Capital Market" (hereinafter referred to as the "Opinions") issued by the China Securities Regulatory Commission, the Ministry of Public Security, the Ministry of Finance, the People's Bank of China, the State Administration of Financial Supervision, and the State-owned Assets Supervision and Administration Commission of the State Council.
Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the Opinions thoroughly implement the spirit of the 20th National Congress of the Communist Party of China, conscientiously implement the spirit of General Secretary Xi Jinping's important instructions on the reform and development of the capital market, adhere to the general tone of seeking progress while maintaining stability, adhere to the direction of marketization and rule of law, further intensify the crackdown on financial fraud, improve the regulatory coordination mechanism, build a long-term mechanism for the prevention and control of financial fraud, increase system supply, strengthen incentives and constraints, and provide strong support for promoting the high-quality development of the capital market.
The "Opinions" clarify five key measures. First, it is necessary to resolutely crack down on and curb financial fraud in key areas. Strictly punish the fraudulent issuance of stocks and bonds, severely crack down on systematic fraud and cooperative fraud, strengthen supervision over the abuse of accounting policies to commit fraud, and strengthen the crackdown on financial fraud in specific areas. The second is to optimize the system and mechanism of securities supervision and law enforcement. Complete mechanisms for discovering leads, increase the efficiency of administrative law enforcement, and deepen coordination in executions. The third is to increase all-round and three-dimensional accountability. Strengthen the deterrent effect of administrative accountability, promote the increase of criminal accountability, and promote the improvement of civil accountability support mechanisms. Fourth, strengthen inter-ministerial coordination and coordination between the central and local governments. Investors of state-owned assets have strengthened supervision and management, and financial regulatory departments have strengthened coordinated crackdowns to consolidate the responsibilities of local governments. Fifth, normalize and long-term prevention and control of financial fraud. Strengthen endogenous constraints on corporate governance, consolidate the "gatekeeper" responsibilities of intermediaries, improve systems related to financial information, and strengthen joint disciplinary action and social supervision.
The "Opinions" require all regions and departments to effectively unify their thoughts and actions with the decision-making and deployment of the Party Central Committee and the State Council, strengthen policy convergence and work coordination, strengthen supervision and accountability, effectively coordinate the fight against financial fraud and risk prevention and resolution, maintain the stable operation of the capital market, and contribute to high-quality economic and social development. Opinions on Further Improving the Comprehensive Punishment and Prevention of Financial Fraud in the Capital Market: China Securities Regulatory Commission, Ministry of Public Security, Ministry of Finance, People's Bank of China, State Administration of Financial Supervision and Administration of the State Council State-owned Assets Supervision and Administration Commission The capital market plays an important role in financial operations, and financial fraud seriously disrupts the order of the capital market and shakes investor confidence. In recent years, all relevant parties have conscientiously implemented the decisions and arrangements of the Party Central Committee and the State Council, continued to strengthen supervision and law enforcement, and a number of financial fraud cases have been investigated and dealt with in a timely manner, and the market ecology has been effectively purified. However, the task of effectively cracking down on systematic, concealed, and complex financial fraud is very arduous, and we must adhere to comprehensive measures, strengthen both the symptoms and the root causes, continue to maintain a high-pressure situation, and effectively enhance the joint force of work. In order to strictly crack down on financial fraud in the capital market and maintain a positive market ecology, the following opinions are hereby put forward on further doing a good job in the comprehensive punishment and prevention of financial fraud. 1. The overall requirements are guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly implement the spirit of the 20th National Congress of the Communist Party of China, conscientiously implement the spirit of General Secretary Xi Jinping's important instructions on the reform and development of the capital market, adhere to the general tone of the work of seeking progress while maintaining stability, adhere to the direction of marketization and rule of law, further increase the intensity of the crackdown on financial fraud, improve the regulatory coordination mechanism, build a long-term mechanism for the prevention and control of financial fraud, increase the supply of systems, strengthen incentives and constraints, and provide strong support for promoting the high-quality development of the capital market. ——Adhere to the problem-oriented approach. Strictly crack down on financial fraud in accordance with the law, strengthen penetrating supervision, and improve the quality and efficiency of law enforcement and judicial work. Persist in "chasing the first evil" and "fighting accomplices" at the same time, and strengthen the accountability of those responsible for counterfeiting and those cooperating with counterfeiters. -- Adhere to the system concept. Gather the joint efforts of all parties to improve the systematic, holistic and coordinated nature of the comprehensive punishment and prevention of financial fraud. Strengthen the combination of various departments and regions, and form a work pattern in which all departments and regions perform their own duties and work together. ——Adhere to integrity and innovation. Increase the supply of basic systems, innovate ways and methods, and build a normalized and long-term working mechanism. Strengthen incentives and constraints, enhance endogenous motivation, and create a good market environment that advocates integrity and does not make false accounts. 2. Resolutely crack down on and curb financial fraud in key areas (1) Strictly punish fraudulent issuance of stocks and bonds. We will continue to optimize and improve the review and registration mechanism for the issuance and listing of stocks and bonds, and ensure the "entry gate" of the capital market. Intensify on-site inspection and supervision of stock issuance, focus on abnormal growth in performance, and strictly prevent "breaking through with illness". Focus on defaulted and risky bond issuers, and crack down on fraudulent issuance, false information disclosure, misappropriation of raised funds, debt evasion and other violations of laws and regulations. (2) Crack down on systematic counterfeiting and cooperative counterfeiting. Closely follow up on the characteristics and evolution trends of systematic and gang-type financial fraud, and strictly crack down on systematic fraud through methods such as forging or altering vouchers, using fictitious transactions of related parties, or third-party cooperation. Comprehensively punish the planners, organizers, implementers, and cooperators of financial fraud, as well as professional criminal gangs that professionally cooperate with fraud, and resolutely break the "ecosystem" of fraud. (3) Strengthen supervision over the abuse of accounting policies to commit fraud. Strengthen financial and accounting supervision, and intensify the crackdown on the abuse of accounting policies and accounting estimates to carry out financial fraud. Pay close attention to the implementation of accounting policies and accounting estimates, and intensify the crackdown on manipulating asset impairment provisions to adjust profits and using financial "bathing" to cover up fraud in the previous period. (4) Strengthen the crackdown on financial fraud in specific areas. Punish financial fraud carried out by securities issuers and listed companies through false trade methods such as "idling" and "taking orders" in accordance with law. Crack down on financial fraud through the use of supply chain finance, commercial factoring, bill trading, and other means. Strictly punish financial fraud carried out for the purpose of completing the performance commitments of mergers and acquisitions, facilitating major shareholders to obtain huge dividends, meeting the conditions for exercising equity incentives, and avoiding delisting. Consolidate the diligence and due diligence responsibilities of private equity venture capital fund managers, strengthen due diligence and post-investment management of the financial authenticity of the projects invested by the fund, and prevent the occurrence of fraud. 3. Optimize the system and mechanism of securities regulatory law enforcement (5) Improve the mechanism for discovering clues. Strengthen routine regulation, increase the force of oversight and inspections, highlight the role of science and technology in support, give play to the supporting functions of the national credit information sharing platform, make inquiries into the national basic financial credit information database in accordance with law, and identify leads on financial fraud through multiple channels. Improve the whole-process closed-loop management mechanism for leads, and standardize the procedures for handling leads. Use electronic inquiry of bank statements and anti-money laundering assistance mechanisms in accordance with laws and regulations to increase the efficiency of inquiries into funds involved in cases. Establish and complete a directory of parties cooperating with counterfeiters, extending the investigation and collusion and analysis of clues on fraud by other relevant parties. Optimize the overall scheduling of inspections and investigations and cross-regional coordination mechanisms to improve the ability to find major and complex clues. (6) Enhance the efficiency of administrative law enforcement. Accelerate the transformation of supervision, optimize the functional positioning of each line and link, and build an efficient and coordinated regulatory framework. Strengthen the coordination of business lines such as issuance review, corporate supervision, and intermediary supervision, and improve the efficiency of supervision. Strengthen the connection of daily supervision, inspection and law enforcement, administrative punishment and other links, and improve the efficiency of law enforcement. Improve mechanisms for the investigation and punishment of major financial fraud cases, and improve the quality and efficiency of investigations. Summarize law enforcement experience in a timely manner, and continue to optimize the regulatory workflow mechanism. Make good use of the memorandum of understanding on bilateral and multilateral regulatory cooperation signed with overseas securities regulators, increase cross-border cooperation in investigations, and improve the efficiency of investigation and punishment of financial fraud using overseas business. (7) Deepen coordination in the connection of executions. Promote the strengthening of cooperation between securities law enforcement and judicial organs in information sharing, case handling, warning education, etc. For leads on major securities violations such as fraudulent issuance, illegal information disclosure, and breach of trust harming the interests of listed companies, if conditions are met, joint intelligence guidance and investigation efforts are to be promptly initiated. For cross-regional, systematic, and other major cases of counterfeiting, promote the establishment and completion of mechanisms for the joint listing and supervision of public security and procuratorial organs, and increase the efficiency of the investigation and handling of major and important cases. Fourth, increase the intensity of all-round and three-dimensional accountability (8) Strengthen the deterrent effect of administrative accountability. Accelerate the issuance of regulations on the supervision and administration of listed companies, and clarify the legal liability of third parties for cooperating with fraud, capital occupation and other violations. Make full use of legal authorization, increase the degree of punishment for cases of financial fraud, and resolutely enforce market bans on the main responsible personnel in accordance with the law. Optimize the standards for administrative penalties for financial fraud, and greatly increase the cost of violating the law. For the person subject to enforcement who has transferred property in bad faith, the relevant property shall be recovered by filing a lawsuit for revocation with the court. Strictly implement the system of forced delisting for major violations, resolutely delist companies with fraudulent issuance and serious financial fraud in accordance with the law, and strengthen the accountability of relevant institutions and individuals. (9) Promote increased criminal accountability. Promote the issuance of judicial interpretations on the crime of breach of trust harming the interests of listed companies, and increase the extent of criminal accountability for controlling shareholders and actual controllers in organizing and carrying out financial fraud, embezzlement of listed companies' assets, and other such acts. Dig deep into clues on illegal crimes such as misappropriation of funds, embezzlement of duties, breach of trust, and damage to the interests of listed companies by directors and senior managers of listed companies. Where third-party personnel such as suppliers, customers, intermediaries, and financial institutions cooperate in carrying out financial fraud, which constitutes a crime, criminal responsibility is to be resolutely pursued in accordance with law. (10) Promote the improvement of support mechanisms for civil accountability. Explore the establishment of a securities public interest litigation system. Promote the simplification of registration, litigation, enforcement and other procedures, improve the model judgment mechanism, and increase the application of the special representative litigation system for securities disputes. Coordinate the use of a series of investor compensation relief systems and mechanisms, such as advance compensation, support litigation, subrogation litigation, and commitment by administrative law enforcement parties, to further increase the cost of violating the law. 5. Strengthen inter-ministerial coordination and central-local coordination (11) Strengthen supervision and management of investors of state-owned assets. The departments that perform the duties of investors of state-owned assets and the competent departments of relevant enterprises continue to strengthen the supervision and management of the invested enterprises, promptly urge the relevant enterprises to deal with the financial fraud and cooperation of the securities issuers and listed companies they control in accordance with laws and regulations, strictly pursue accountability, and promptly feedback the results to the financial and securities regulatory departments. Supervise and urge the invested enterprises to actively fulfill their shareholder supervision responsibilities for the financial authenticity of the issuers of the securities in which they participate and the listed companies. Strengthen law enforcement cooperation, and where clues involving financial fraud of other securities issuers or listed companies are discovered, the clues shall be promptly transferred to the financial and securities regulatory departments. (12) The financial regulatory authorities have strengthened the coordinated crackdown. The financial regulatory authorities shall promptly deal with the financial fraud, cooperate with the fraud, and provide assistance for the illegal occupation of guarantees of the affiliated enterprises and the enterprises under their supervision, and report to the financial and securities regulatory departments. Urge banks and other financial institutions to strengthen their attention to and review the financial authenticity of securities issuers, listed companies and other loan recipients. On the basis of the centralization of letters, accelerate the digital processing of letters, encourage and guide intermediaries and other entities to carry out confirmation business through digital confirmation platforms, and increase the supervision and inspection of the compliance of financial institutions' confirmation business. Strengthen the division of labor and cooperation between securities law enforcement and financial law enforcement to avoid regulatory vacuums and duplication of supervision. Intensify unified law enforcement in the bond market and improve the efficiency of law enforcement. (13) Consolidate the responsibilities of local governments. In the process of providing policy support, local governments at all levels regard the financial authenticity of securities issuers and listed companies as an important basis for supporting the good and limiting the inferior, and issue tax and compliance documents in accordance with laws and regulations. Provide support for relevant departments in the fields of market supervision, taxation, energy consumption, social security payment, litigation and arbitration, property rights registration, etc. Strengthen coordination with relevant departments, and earnestly fulfill the responsibility for the territorial disposal of risks caused by financial fraud. 6. Normalized and long-term prevention and control of financial fraud (14) Strengthen endogenous constraints on corporate governance. Guide securities issuers and listed companies to strengthen the construction of internal control systems, and highlight the supervision and restraint of key areas and links of fraud. Implement the requirements for the reform of independent directors, effectively play the supervisory role of independent directors, and strengthen the anti-fraud responsibilities of the audit committee. Promote listed companies to establish internal accountability mechanisms such as recourse for performance-based compensation, and urge directors and senior managers to perform their duties and responsibilities. Strengthen assessment constraints, and make financial fraud a deduction item in the business performance evaluation of the responsible persons of state-owned enterprises at all levels. Increase the intensity of publicity and education for the "key minority", and make the awareness of integrity and compliance the core content of capital market training. (15) Consolidate the "gatekeeper" responsibilities of intermediaries. Promote a quality-oriented evaluation mechanism for the practice quality of intermediaries of listed companies and bond issuers. Supervise and urge intermediary institutions such as sponsor institutions, accounting firms, asset appraisal institutions, and law firms to strengthen practice quality control. Strengthen the supervision and inspection of intermediaries, and if intermediaries discover financial fraud involving securities issuers or listed companies, they shall promptly report to the financial and securities regulatory departments. Where intermediaries take the initiative to report when they discover fraudulent conduct, they are to be given a lighter or commuted punishment in accordance with law. Complete the credit records of intermediary institutions and practitioners, and urge relevant institutions and personnel to be diligent and conscientious. Intermediaries with major violations of laws and regulations shall suspend or prohibit them from engaging in securities service business in accordance with the law, and strictly implement systems such as revocation of practice licenses and prohibition of practitioners. (16) Improve systems related to financial information. Improve the rules for the supervision of accounting, auditing, and evaluation in the capital market, publish application cases or implementation Q&A in key areas, and strengthen guidance on the implementation of accounting standards. Strengthen the construction of the financial and accounting supervision system, promote the application of electronic voucher accounting data standards, and improve the level of standardization of enterprise financial accounting. Improve the regulatory system for exemption from information disclosure, strictly enforce exemption conditions and procedures, and prevent securities issuers and listed companies from abusing exemptions to cover up fraudulent acts. (17) Strengthen joint disciplinary action and social oversight. Include untrustworthy entities with serious violations such as financial fraud, appropriation of funds, and cooperation in fraud into the list of seriously untrustworthy entities in the financial sector, send them to the national credit information sharing platform, and display the relevant information on the "Credit China" website and the national enterprise credit information publicity system, carry out joint disciplinary action in accordance with laws and regulations, and strengthen restraints on untrustworthiness. Improve the reward mechanism for insiders to report major violations of laws and regulations such as financial fraud, increase the amount of rewards, and protect the lawful rights and interests of "whistleblowers". Publish the investigation and handling of typical cases of violations, and increase the intensity of warning publicity. 7. Implement safeguards (18) Strengthen organization and implementation. It is necessary to conscientiously unify thoughts and actions with the decision-making and deployment of the Party Central Committee and the State Council, strengthen policy convergence and work coordination, strengthen supervision and accountability, and seriously pursue responsibility and accountability for those who have caused serious consequences due to ineffective management or supervision of their duties. Give full play to the role of mechanisms such as the Coordination Working Group on Combating Illegal Activities in the Capital Market in the coordination of major cases, the formulation of important rules, and the consultation of major issues. (19) Strengthen the guidance of public opinion. Strengthen publicity and interpretation of the comprehensive punishment and prevention of financial fraud in the capital market, pay attention to active guidance, innovate publicity methods, and build consensus among all parties. Promptly summarize and promote experience and practices, and promote the creation of a market ecology of honest management and respect for law and trustworthiness. (20) Strengthen risk prevention and control. Strengthen risk investigation in key areas, and resolutely eliminate industry-wide, systemic, and regional financial fraud with large hidden risks. Effectively coordinate the fight against financial fraud and risk prevention and mitigation, maintain the stable operation of the capital market, and contribute to high-quality economic and social development.
Source: Xinhua News Agency, Chinese government website
The China Securities Regulatory Commission (CSRC) seriously investigated and dealt with five cases of illegal information disclosure such as financial fraud of listed companies
The China Securities Regulatory Commission (CSRC) has always insisted on cracking down on illegal cases of information disclosure such as financial fraud and major shareholders' appropriation of funds. Recently, the China Securities Regulatory Commission (CSRC) has imposed administrative penalties and prior notices on five listed companies for information disclosure violations such as financial fraud and major shareholder occupation of funds. The first is to issue administrative penalty decisions to Jiangsu Shuntian, ST Texin, and *ST Zhongli, with a cumulative fine of 68.3 million yuan, and implement securities market prohibition measures for 6 main responsible persons; The second is to issue a prior notice of administrative punishment to the two companies of East and Caesar Tongsheng, with a total fine of 52.7 million yuan, and it is proposed to implement measures to prohibit one main responsible person from entering the securities market. Administrative penalties are not the end, the CSRC continues to strengthen coordination with public security and judicial organs, promote all-round and three-dimensional accountability, and on the basis of increasing administrative penalties, promote the superposition of criminal accountability, civil compensation and other methods, and comprehensively increase the cost of violations. The China Securities Regulatory Commission adheres to the working principle of "should be moved as far as possible", and resolutely transfers financial fraud to the public security organs in accordance with the law if it constitutes a crime, and seriously investigates criminal responsibility. For other cases suspected of crimes, the China Securities Regulatory Commission will strictly follow the "Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on the Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II)", and promptly transfer them to the public security organs in accordance with the law, resolutely pursue criminal responsibility, and never tolerate them. For those who meet the conditions for civil liability, the investment service center will be supported to adopt a series of investor compensation relief systems such as support litigation, representative litigation, and subrogation litigation to initiate civil liability, and support investors in litigation and rights protection in accordance with the law. For example, in the case of Jiangsu Shuntian, the relevant court has formally accepted the application submitted by the Investment Service Center to support the investor's lawsuit, and will subsequently initiate civil liability procedures in accordance with the law. In the next step, the China Securities Regulatory Commission will continue to strengthen the three-dimensional accountability of the controlling shareholders and actual controllers for organizing and implementing financial fraud and embezzlement of listed companies' assets, continue to deepen the linkage with the public security and judicial organs, and further promote the formation of a regulatory and law enforcement "ecosystem" of joint governance and orderly cohesion, and implement the regulatory and law enforcement requirements of "long teeth and thorns".
Source of this article: Issued by the China Securities Regulatory Commission
WeChat editor: Wang Qian
Introduction to "Risk Warning: Financial Edition".
Finance is the lifeblood of the modern economy, and financial stability leads to economic stability. Financial security is related to the overall development of national and regional enterprises, and it is necessary to maintain a high degree of vigilance against financial risks at all times, enhance the awareness of risk prevention, respond scientifically, and prevent them from occurring. Under the guidance of the authoritative government departments, relying on the advanced big data public opinion monitoring system and a professional analyst team, the "Risk Warning Financial Edition" produced by the China Financial Information Center summarizes, analyzes, and judges the risk public opinion in different fields and categories of the financial industry, and provides authoritative, professional, practical, timely and effective financial risk public opinion monitoring, research and judgment, early warning and response suggestions for financial regulatory departments, factor markets, financial institutions, listed companies, industry associations, various enterprises, colleges and universities, research institutions, etc. 18,000 per year, once a week, released every Friday.
Latest Report:
【June 2024 Issue 4】Issue 132: When is the trust super long "labor pain" period?
【2024 Year 6 Issue 3】Total Issue 131: Water and Soil Adaptation? There is a long way to go for the localization of foreign public offerings
【June 2024 Issue 2】Issue 130 in total: Strict words are the head, and the "storm" of delisting is coming?