Recently, Guangdong securities regulatory bureau took regulatory measures against YueKai securities (830899. OC), which failed to maintain professional caution in the process of entrusted management of the non-public issuance of corporate bonds projects “17 Lusheng 01”, “18 Lusheng 01” and “18 Lusheng 02” by Shandong Shengtong Group Co., Ltd. (hereinafter referred to as “Shengtong group”). At the same time, three relevant responsible persons were also issued warning letters.
Earlier, the CSRC issued a decision on administrative punishment to YueKai Securities for the same case.
In this regard, the reporter of Huaxia times repeatedly called YueKai securities and failed to get through. Meanwhile, the reporter sent an interview letter to YueKai securities, but as of press time, no specific reply has been received.
Professor Liu Junhai, director of the Institute of commercial law of Renmin University of China, told the Huaxia times: “regulators need to severely crack down on illegal acts such as intermediaries endorsing false letters of listed companies, so as to protect the legitimate rights and interests of investors. In the future, regulators should also fully activate the toolbox of administrative liability, civil liability, criminal liability and credit liability.”
61.5 billion counterfeiting case
According to the warning letter of Guangdong securities regulatory bureau, after investigation, YueKai securities, as the trustee of “17 Lusheng 01”, “18 Lusheng 01” and “18 Lusheng 02” non-public corporate bond projects of Shengtong group, failed to maintain professional prudence in the process of entrusted management.
Guangdong securities regulatory bureau said that the above acts violated the provisions of Articles 7, 49 and 52 of the measures for the administration of corporate bond issuance and Trading (CSRC Order No. 113, hereinafter referred to as the measures). Warn the company in accordance with Article 58 of the measures. At the same time, the supervision measures of issuing warning letters were taken for Zhou Huazuo, the then head of the debt financing department, Chen Feng and Tian Qiyun, the project leaders.
The reporter of Huaxia Times noted that on November 26, 2021, YueKai securities received the advance notice of administrative punishment issued by the CSRC because it was suspected of providing services for Shengtong group to issue corporate bonds without diligence. On December 23, the formal decision on administrative punishment was issued.
The CSRC ordered YueKai securities to make corrections, gave a warning, confiscated 6.6 million yuan of illegal income, imposed a fine of 600000 yuan, and confiscated 7.2 million yuan in total; The then general manager and two project leaders of the bond financing department of YueKai securities were also warned and fined 200000 yuan respectively.
Different from the above warning letter, the CSRC’s administrative punishment decision is to punish YueKai Securities for its role as the lead underwriter of bonds, while the warning letter separately points out the role of YueKai securities as the bond trustee.
According to the data, on December 1, 2016, YueKai securities signed the underwriting agreement with Shengtong group, and YueKai securities acted as the lead underwriter of “17 Lusheng 01”, “18 Lusheng 01” and “18 Lusheng 02” of Shengtong group’s non-public issuance of corporate bonds.
According to the administrative punishment decision, YueKai securities did not pay careful attention to the abnormalities of Shandong Shengtong steel cord Co., Ltd. in terms of capacity utilization and sales revenue; Failing to pay careful attention to the inconsistency between the information provided by Shengtong steel cord and the public data; The production and business premises of Shandong Shengtong Chemical Co., Ltd. were not inspected on the spot, and it was not found that Shengtong chemical was in the state of shutdown; Failed to pay careful attention to the abnormalities of tax declaration materials of Shengtong steel cord.
When writing the bond prospectus, Shengtong group falsely increased the total operating revenue of RMB 61.54 billion and the total profit of RMB 11.911 billion from 2013 to 2017 by fictitious purchase and sales business, preparing false financial account sets and directly modifying the audit report.
The above behaviors lead to false records in the prospectus of “17 Lusheng 01”, “18 Lusheng 01” and “18 Lusheng 02” of Shengtong group. There are also false records in the verification opinions and commitment letter issued by YueKai securities.
YueKai Securities said in the announcement that in response to the above events, the company took a warning, carefully found and rectified problems, implemented rectification measures in accordance with the requirements of regulators, established, improved and strictly implemented the internal control system, workflow and operation specifications of investment banking business, worked diligently and conscientiously, and effectively improved the quality of investment banking business.
Liu Junhai told Huaxia times: “Regulators need to severely crack down on illegal acts such as endorsing false information phi of listed companies by intermediaries, so as to protect the legitimate rights and interests of investors. At the same time, intermediaries need to self pressurize to find out the weaknesses in practice and the blind spots and blind spots in compliance work. The reform of registration system takes information Phi as the core, takes strict supervision as the premise, and takes severe punishment and severe law as the backing, so as to improve afterwards punishment In the future, regulators should also fully activate the toolbox of administrative liability, civil liability, criminal liability and credit liability. “
15 billion fixed increase suspension
On April 17, 2021, YueKai securities announced that it planned to issue no more than 8.33 billion new shares, priced at 1.8-2 yuan per share, and planned to raise no more than 15 billion yuan. The total number of new investors in this offering is no more than 35, and the existing shareholders do not enjoy the preemptive right.
In terms of fund use, the raised funds shall not exceed 6 billion yuan for investment and trading business, 4 billion yuan for margin trading business, 1 billion yuan for asset management business, and 4 billion yuan for repayment of subordinated debt and other debts.
However, due to the influence of Shengtong incident, the review of this 15 billion fixed increase was suspended. On November 12, 2021, YueKai securities announced that it had received the notice on suspension of examination of administrative license application issued by the CSRC. Due to the previous investigation by the CSRC, the CSRC suspended the administrative license examination of the company’s application for directional issuance of shares.
It is worth noting that in the first half of 2021, the investment bank of YueKai securities recorded a revenue of 30.92 million yuan, a year-on-year decrease of 28.7% over the same period in 2020. The operating profits of the business from 2018 to 2020 were – 12.87 million yuan, – 19.59 million yuan and – 4.24 million yuan respectively, with a cumulative loss of 36.71 million yuan in recent three years.
According to the data, at present, 9 bonds issued by Shengtong group have substantial default, and the default balance of bonds has reached 5.55 billion yuan. Among them, the underwriters of 6 bonds such as “16 Shengtong 01” are Sealand Securities Co.Ltd(000750) and YueKai securities, accounting for nearly 70% of the quantity and 82% of the amount.
On March 7, 2019, Shengtong group announced that it applied for reorganization to the intermediate people’s Court of Dongying City, Shandong Province. On March 15, 2019, Shandong Dongying intermediate people’s court ruled to accept the company’s reorganization application.
What is the current situation of debt restructuring and actual operation of Shengtong group? The reporter of Huaxia times dialed the mobile phone of the staff of Shengtong group, but after connecting, the person hung up on the ground that he couldn’t hear clearly.
(source: Huaxia times)
