On December 26, the heads of the relevant departments of the Supreme People's Court and the Supreme People's Procuratorate answered reporters' questions on the joint release of typical cases of strictly cracking down on private placement crimes in accordance with the law, emphasizing that they would continue to increase the punishment of private placement crimes.
At present, the management scale of China's private equity industry has exceeded 20 trillion yuan, ranking among the top in the world. As an integral part of the multi-level capital market, the private equity industry has played an important role in promoting equity capital formation, serving the real economy, and boosting scientific and technological innovation. At the same time, there have also been illegal fund-raising in the name of "private placement", and illegal and criminal acts such as misappropriation and embezzlement of private equity assets by private equity managers, affecting the healthy development of industry norms.
Under this situation, the Supreme People's Court and the Supreme People's Procuratorate have strictly cracked down on private equity crimes, with remarkable results, providing a strong judicial guarantee for the construction of a good capital market ecology. Since 2021, procuratorial organs across the country have prosecuted a total of 2,085 people for private placement crimes. From 2021 to October 31, 2023, courts across the country sentenced a total of 1,888 people for private placements.
In the long run, the "two supremes" will strictly crack down on private placement crimes, effectively prevent and resolve major financial risks, maintain national financial security and overall social stability, and release three positive signals.
First of all, it is clear that there is "zero tolerance" to punish private equity crimes. At present, the crackdown on private placement crimes has entered the stage of "all-round and no dead ends", covering the whole process of private equity raising, investment and management, involving private equity, private placement and non-filing "pseudo", including illegal fundraising, fraud, misappropriation of funds, embezzlement, market manipulation and other crimes, the scope of the crackdown is wider, more targeted, and more vigorous, maintaining social stability and market order.
Strictly cracking down on private placement crimes, not only drawing a "red line" and "bottom line" for private equity practitioners, but also educating and warning them to legally raise funds, invest in compliance, and operate in good faith. At the same time, it also reminds investors that which behaviors and which fields have a high incidence of crimes, we must effectively prevent risks and beware of money loss. This also fully reflects the determination of the regulatory authorities to punish crimes, prevent crimes, and help the industry to move forward.
Second, it demonstrates the attitude of protecting the legitimate rights and interests of investors. Investor protection is the top priority in strictly cracking down on private placement crimes, and the recovery of stolen goods and losses has always been implemented in judicial work. The procuratorial organs carry out the entire process of recovering stolen goods and recovering losses, adhere to the principle of "pursuing everything that should be pursued", and do their best to help investors recover economic losses through various means such as "double investigation in one case" and clues on money laundering crimes and commercial bribery crimes. The people's courts have always carried out the recovery of stolen goods and losses throughout the entire process of trial and disposal of cases, properly handling major cases of private equity crimes involving the public, and minimizing investment losses.
Finally, it shows the intention of caring for the development of the private equity industry. The regulatory authorities have strictly cracked down on private equity crimes, increased risk rectification in key areas, eliminated regulatory gaps and blind spots, cleared out a number of "black sheep", and promoted the withdrawal of some private equity managers operating in violation of laws and regulations, and the number of managers cancelled has repeatedly reached new highs, exceeding 2,000 for two consecutive years, and the industry ecology has been gradually purified and continues to improve. This has also accelerated the industry's self-clearance and survival of the fittest, and a number of strong and well-performing private equity institutions have come to the fore to create better returns for investors and promote the transformation of the industry from "quantitative growth" to "qualitative improvement".
What is even more exciting is that in addition to strictly cracking down on private placement crimes, the "two supremes" are also continuing to improve the judicial system, clarify judicial standards, improve judicial interpretations, and provide fundamental compliance from the source. At present, the Supreme People's Procuratorate is studying and drafting normative documents for handling private placement cases, further clarifying the application of law and evidence review standards.
At the same time, the strict crackdown on private placement crimes is also forming a joint regulatory force to improve regulatory efficiency. The heads of the relevant departments of the "two supremes" made it clear that they would strengthen cooperation with the first regulatory agencies, public security organs and other departments. Procuratorial organs at all levels have strengthened normalized cooperation with ** regulatory agencies and their dispatched agencies in information sharing, clue transfer, consultation and discussion, prevention and publicity, and other aspectsThe people's courts and procuratorial organs at all levels have strengthened mutual cooperation with the public security organs in guiding investigations, clarifying the thinking of proof of accusations, and unifying the application of law.
It can be expected that the "heaven and earth net" of strictly cracking down on private equity crimes will become denser and denser, and with the clearing of private equity risks and the purification of the market ecology, the road to the standardized and healthy development of the entire private equity industry will become wider and wider.