Recently, many local securities regulatory bureaus issued fines to intermediaries, involving securities companies and audit institutions, mostly due to the lack of diligence in project operation.
It is more important to continuously strengthen the supervision of the investment bank as an intermediary. Tian Lihui, President of the Institute of financial development of Nankai University, said that the regulatory authorities have always required intermediaries to be diligent and conscientious and give full play to the role of “gatekeeper”. Since the implementation of the registration system, the regulatory authorities have strengthened the supervision of intermediaries and made stricter requirements. In the new regulatory environment, intermediaries should strengthen the responsibility, comprehensively improve their professional ability and strengthen the whole process control.
several securities companies received fines
On May 17, Guangdong Securities Regulatory Bureau issued the decision on administrative supervision measures. Due to the failure to perform the continuous supervision duties diligently in the Songyang resource project, Guangdong securities regulatory bureau decided to take regulatory measures against Yingda securities to order to increase the number of internal compliance inspections. Yingda securities needs to carry out internal compliance inspection every two months and submit the compliance inspection report to Guangdong securities regulatory bureau.
Yingda securities was ordered by Guangdong securities regulatory bureau to increase the number of internal compliance inspections, mainly due to the supervision of the on-site inspection of Songyang resources of listed companies. As the sponsor of continuous supervision of Songyang resources’ IPO, the continuous supervision of Yingda securities has also been extended.
Guangdong securities regulatory bureau pointed out that Yingda securities failed to fulfill its continuous supervision responsibilities diligently, and did not find that Songyang resources had not considered and disclosed related party transactions, used the raised funds illegally from 2019 to 2020, and there were major defects in internal control in 2019 and inconsistent with the disclosed internal control evaluation information. In a series of documents such as the continuous supervision on-site inspection report previously issued by Yingda securities, the above violations of Songyang resources were not truly and accurately reflected.
Specifically, Guangdong Securities Regulatory Bureau ordered Yingda securities to carry out an internal compliance inspection every two months within six months from the date of issuance of the decision on regulatory measures, comprehensively inspect the establishment of the company’s recommendation business system, the implementation of the continuous training system of the recommendation representative and the implementation of the standard rectification of relevant problems, and regularly conduct a comprehensive evaluation on the effectiveness of the internal control of the recommendation business, so as to ensure that the recommendation representative The Project Co sponsors and other relevant personnel of recommendation business are diligent and responsible, strictly control risks and improve the quality of recommendation business. Improve the management system and internal control measures according to the inspection, and submit the compliance inspection report to Guangdong securities regulatory bureau within 10 working days after each inspection. Guangdong securities regulatory bureau will organize inspection and acceptance of the rectification of Yingda securities according to the situation.
In addition to Yingda securities, securities companies have frequently encountered regulatory fines for investment banking recently. On May 12, Guizhou securities regulatory bureau and Jiangsu securities regulatory bureau respectively issued regulatory measures for two securities companies, Shengang securities and Huaying securities. The punishment contents are related to investment banking business.
Guizhou securities regulatory bureau pointed out that as the sponsor of Guizhou Sanli Pharmaceutical Co.Ltd(603439) initial public offering and listing, Shengang securities did not pay continuous attention to the commitment matters such as the special account storage of the issuer’s raised funds and the implementation of investment projects, and decided to adopt the regulatory measures of issuing warning letters for Shengang Securities and two insurance agents.
Huaying securities was also issued a warning letter by Jiangsu securities regulatory bureau for failing to fully investigate the issuer and imperfect internal control quality control in the Souyute Group Co.Ltd(002503) convertible bond project, and required it to establish and improve the internal control system, workflow and operation specifications of investment banking business, so as to effectively improve the quality of investment banking business.
In April this year, due to problems such as violations in the development of ABS business, incomplete letter pHi in the duration of some ABS projects, insufficient allocation of compliance personnel in the company’s investment banking business and insufficient effectiveness of internal control in the investment banking business, Beijing Securities Regulatory Bureau took administrative regulatory measures of ordering corrections and regulatory talks to the principals of Cinda securities and its investment banks.
some audit institutions have been severely fined
diligence is the key
Shenzhen Securities Regulatory Bureau recently announced the decision on administrative punishment against Dahua certified public accountants. Earlier, Changyuan Heying Intelligent Technology Co., Ltd., a subsidiary of Changyuan Technology Group Ltd(600525) holding, inflated its performance by fictitious overseas sales, recognizing revenue in advance, repeatedly recognizing revenue, signing “Yin-Yang contract”, and project accounting did not comply with accounting standards. The total profits of Changyuan Technology Group Ltd(600525) 2016 and 2017 were inflated by 123 million yuan and 180 million yuan respectively, accounting for about 15% of the total profits of the current period, but Dahua Institute was optimistic about Changyuan Technology Group Ltd(600525) 2016 The 2017 financial statements issued a standard unqualified audit report.
Shenzhen Securities Regulatory Bureau believes that Dahua office failed to be diligent and responsible in the audit process, and there are false records in the audit report issued, so it should bear the audit responsibility, and decided to order Dahua office to make corrections, confiscate its business income of 3.8679 million yuan and impose a fine of 7.7358 million yuan; The four certified public accountants involved were warned and fined 60000 yuan respectively.
Previously, in order to help Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) avoid delisting, Shenzhen Tangtang certified public accountants signed a “drawer agreement” with the company and issued an audit report containing false records and major omissions, which finally ushered in heavy regulatory penalties. The CSRC carried out an administrative penalty of “six penalties for each case”.
Chen Bo, partner of Deheng Shanghai law firm, pointed out that in recent years, there has been a significant increase in administrative penalties, civil compensation and even criminal liability cases of intermediaries in the process of employment. For intermediaries themselves, they need to adhere to the necessary professional standards, and adhering to quality is the key to settle down.
Tian Lihui pointed out that under the background of the promotion of the registration system, the supervision of securities companies, audit institutions and other intermediaries in the capital market has changed to the direction of full chain, precision and ruthlessness in advance, in the process and after the event, prompting intermediaries to practice carefully at all times. At the same time, the increase in the number of listed companies not only provides more business for intermediaries, but also brings challenges. Intermediaries should follow up the changes of laws and regulations, practice standards and regulatory rules and continuously condense professional advantages in order to remain invincible.
