China’s securities watchdog has imposed 60 fines since the start of the registration-based IPO system


(Yicai Global) July 19 — In the three years since the start of easier and faster registration-based reform for initial public offerings on the Chinese mainland, a number of intermediary companies such as brokerage houses and investment banks were penalized for failing to perform their obligations. duties diligently.

Thirty-seven brokerages were fined 60 between the second half of 2019 and the first half of 2022, according to the latest data from the China Securities Regulatory Commission. Most of the violations related to IPO underwriting, sponsorship, and mergers and acquisitions.

The registration-based system, which was introduced alongside the launch of the Shanghai Stock Exchange’s Nasdaq-style Star Market in July 2019, allows companies to register much faster than the registration-based model. approval by regulators which can take months, even years. It also generates a lot of work for third-party agencies such as issuers, sponsors, underwriters, accounting firms, law firms and especially securities firms.

All of these intermediaries must have a thorough understanding of the role of the watchdog, said CSRC Chairman Yi Huiman. The CSRC will continue to clarify the responsibilities of different entities and strive to form a mechanism in which each party performs its own functions, bears its own responsibilities and restrains each other, he added.

A number of top-tier securities firms, including China International Capital, CITIC Securities, Huatai United Securities and China Securities, have fallen under the regulator’s purview, some of them for serious violations.

GF Securities has had its sponsorship license suspended for six months and its bond underwriting license revoked for 12 months for its role in Kangmei Pharmaceutical’s massive financial fraud. Fourteen people from the Guangdong-based brokerage firm were held directly responsible, and some less involved were also punished, including the confiscation of their remuneration for the project.

Haitong Securities was fined CNY 4 million (USD 593,200) in October last year for failing to act as independent financial advisor in the restructuring and fundraising of major assets of ‘Aurora Optoelectronics.

Smaller brokerages, such as Northeast Securities, Yuekai Securities, Hongxin Securities, as well as Goldstate Securities, were also penalized.

Publishers: Tang Shihua, Kim Taylor

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