2022 is destined to be another year of strict supervision.
Recently, Dongxing Securities Corporation Limited(601198) , new era securities and Zhongtian securities received three tickets in succession. Among them, Zhongtian securities received the first anti money laundering ticket from the securities industry this year and was fined more than one million.
According to incomplete statistics by Chinese reporters of securities companies, since January this year, including the employees of securities companies, securities companies, securities companies’ branches, securities companies’ business departments and securities companies’ asset management companies have received a total of 45 tickets; If the employees of securities companies are excluded and calculated by securities companies, securities companies’ branches, securities companies’ business departments and securities companies’ asset management companies, 15 subjects will be punished or filed for investigation.
The Chinese reporter of securities companies noted that the regulatory treatment results of the above problems are mainly to issue warning letters or order corrections, and some serious cases have been fined or suspended from filing private asset management products for 6 months, as well as public condemnation. It is worth mentioning that the punishment of securities companies may have a far-reaching impact on other aspects of securities companies, such as classification rating deduction, new business application, refinancing credit rating, etc.
the year of the tiger securities industry received three new fines, and Zhongtian securities was fined more than one million
Since the start of the year of the tiger, the latest three ticket industry tickets have surfaced.
On February 15, new era securities and Dongxing Securities Corporation Limited(601198) received two tickets from Jiangsu securities regulatory bureau and Beijing Securities Regulatory Bureau respectively, both of which were supervised and took the regulatory measures of issuing warning letters.
Specifically, new era securities and Dongxing Securities Corporation Limited(601198) violations occurred in the field of investment banking and asset management respectively.
Among them, new era securities has problems with the entrusted “20 overseas investment 01”, “20 overseas investment 02” and “20 overseas investment 03” corporate bonds, including inadequate supervision on the use of the raised funds of the issuer and inadequate supervision on the information disclosure of the issuer.
Dongxing Securities Corporation Limited(601198) is that in the private asset management business, the new asset management regulations are not implemented in place, and the performance compensation of individual products is withdrawn more frequently than once every six months; In addition, the investment management is not standardized and the risk control system is missing.
On February 14 the day before, Zhongtian securities, a brokerage in Northeast China, was also punished. This is also the first anti money laundering ticket received by the securities industry in the year of the tiger. Zhongtian securities was fined 1.371 million yuan by Shenyang Branch of the central bank. Two relevant personnel were responsible for this and were also fined.
According to the publicity information of Shenyang Branch of the central bank, the illegal acts of Zhongtian securities include failing to perform the customer identification obligation and submitting the suspicious transaction report as required.
With the strengthening of anti money laundering in recent years, financial institutions need to further strengthen due diligence and act according to regulations. In fact, in 2021, 7 securities companies including Zhongtai Securities Co.Ltd(600918) , Kaiyuan securities, Anxin securities, Sinolink Securities Co.Ltd(600109) , China Merchants Securities Co.Ltd(600999) , China Industrial Securities Co.Ltd(601377) and China International Capital Corporation Limited(601995) were punished for “ineffective” anti money laundering. Among them, China Merchants Securities Co.Ltd(600999) and China International Capital Corporation Limited(601995) were fined more than one million yuan.
It is the only state-owned securities company established in Shenyang in 2004 with the approval of Liaoning provincial government. With a registered capital of 2.225 billion yuan, the company now has six shareholders, including 40.16% held by Liaoning SASAC and 21.35% held by Benxi Iron and Steel Group, which are the first and second largest shareholders respectively.
Zhongtian securities is a small securities firm with relatively low performance ranking. According to the data of China Securities Association, at the end of the first half of 2021, the total assets of Zhongtian securities reached 10.237 billion yuan, ranking 86th among 139 securities companies; Net assets of 4.109 billion yuan, ranking 93rd; In the first half of 2021, the operating revenue reached 259 million yuan, ranking 104th; The net profit was 98.1 million yuan, ranking 85th.
this year, 15 institutional entities were punished, and investment banks frequently violated rules
According to the incomplete statistics of Chinese journalists from securities companies, since January 2022, securities companies and securities practitioners have received a total of 45 tickets, involving 20 securities companies. Excluding the punished employees of securities companies, a total of 15 subjects, including securities companies, branches of securities companies, business departments of securities companies and asset management companies of securities companies, were punished or filed for investigation.
From the perspective of company size, there are not only small and medium-sized securities companies Dongxing Securities Corporation Limited(601198) , new era securities, Zhongtian securities, Chuancai securities, Zhongde securities, Hongxin securities, YueKai securities, Cinda securities, but also securities companies with Guotai Junan Securities Co.Ltd(601211) , Haitong Securities Company Limited(600837) , Everbright Securities Company Limited(601788) , Ping An Securities and Anxin securities ranking high.
From the perspective of the punished subjects, in addition to the conventional securities companies themselves, the securities companies’ branches and securities companies’ business departments are also exposed to the risk of violations, especially in the development of brokerage business, there are often acts such as inadequate control and illegal sales.
In addition, Zheshang Securities Co.Ltd(601878) Zheshang asset management became the only securities asset management company that received a ticket this year, and the punishment was relatively severe. It was ordered to correct and suspend the filing of private asset management products for 6 months, and ordered the company to punish relevant personnel.
Specific violations and violations of Zheshang asset management include: inconsistent valuation techniques adopted for the same investment variety with the same characteristics, lack of investment transaction management, imperfect investor suitability management system and insufficient staffing of compliance management personnel.
The Chinese reporter of securities companies noted that from the perspective of business types of violations, investment banking is the “hardest hit area”. Among the 15 punished subjects, including new era securities, Anxin securities and Guotai Junan Securities Co.Ltd(601211) were punished for violations of laws and regulations in investment banking; More seriously, Sino German securities, which was involved in the recommendation business of LETV, was filed for investigation by the CSRC.
On January 19, Zhejiang Securities Regulatory Bureau issued 8 investment bank fines to Anxin securities in a day. Due to the failure of investment bank projects to fulfill the obligation of continuous supervision as required, they were ordered to make corrections, and 7 relevant responsible persons were fined in the same period.
The reason why Anxin securities was punished was that it failed to be diligent in carrying out the major asset purchase project in Zhejiang Yatai Pharmaceutical Co.Ltd(002370) 2015 and the public issuance of convertible corporate bonds in 2019, failed to perform the obligation of continuous supervision as required, and the internal quality control was imperfect.
Earlier, in response to the Chinese reporter of the securities firm, Anxin Securities said that the company would take a warning and seriously implement the rectification as required. In the future, it would further strengthen the awareness of compliance and responsibility, constantly improve the company’s internal control mechanism, play the role of “gatekeeper” in the capital market more actively and responsibly, and work together with the regulatory authorities and the exchange, Continuously improve the level of internal governance.
How much impact does the ticket have on securities companies? Impact classification rating
The punishment of securities companies is not new, but what is the impact on securities companies? Industry insiders believe that the collection of fines is mainly reflected in the deduction of classified rating of securities companies, and the quality of classified rating has a direct impact on business development.
Judging from the punishment of securities companies since 2022, more securities companies have been issued warning letters or ordered to make corrections, Haitong Securities Company Limited(600837) is the only one that has been criticized and publicly condemned.
According to the regulatory provisions on classification and rating of securities companies newly revised by the CSRC in 2020, if a securities company is subject to administrative punishment or regulatory measures by the CSRC and its dispatched offices or criminal punishment by judicial organs due to violations of laws and regulations during the evaluation period, corresponding points shall be deducted:
If the company is ordered to make corrections, 1 point will be deducted each time; If the company or its directors, supervisors and senior executives are taken to issue a warning letter because they are responsible for the company’s violations of laws and regulations, 0.5 points will be deducted each time; If the company is publicly reprimanded, its business activities are restricted for less than 6 months, and the documents related to administrative license are not accepted for less than 6 months, 2.5 points will be deducted each time.
Taking Haitong Securities Company Limited(600837) as an example, the classification results of securities companies published in July 2021 show that Haitong Securities Company Limited(600837) is rated as BBB, becoming the only class a securities company among the head securities companies. Previously Haitong Securities Company Limited(600837) and its subsidiaries were punished successively in 2021.
Once the score is deducted, it may affect the level of classified evaluation of securities companies, and the level of classified evaluation has a great impact on securities companies. According to the regulations, the regulation stipulates different risk control index standards and venture capital reserve calculation proportion for different types of securities companies, and treats them differently in terms of regulatory resource allocation, on-site inspection and off-site inspection frequency.
In addition, the classification results of securities companies will also serve as the Prudential conditions for securities companies to apply for increasing business types, issuance and listing, various financing and other matters. It will also serve as the basis for determining the pilot scope and promotion order of new businesses and new products, and will also determine the specific proportion of securities investors’ protection funds paid by securities companies at different levels
