Regulatory loopholes refer to opportunities in the regulatory system that are flawed, imperfect, or misused by stakeholders. Plugging regulatory loopholes refers to taking steps to stop or fix loopholes in the regulatory system to ensure that regulation is more effective and robust. By plugging regulatory loopholes, we can reduce the burden on regulators and regulators, improve the efficiency and credibility of supervision, protect public interests, and maintain market order.
Supervision refers to the supervision of trading, corporate financial information disclosure, insider trading, etc. in the market by ** or related institutions. The purpose of regulation is to protect the interests of investors, maintain the fairness, fairness and transparency of the market, prevent market manipulation and misconduct, and promote the stability and healthy development of the market.
The purpose of supervision is to protect the legitimate rights and interests of market participants by maintaining a fair, just and open market order, and to promote the continuous development of the industry.
China's first regulatory agency is the first industry regulatory commission, as the first regulator, to clarify their responsibilities, in order to ensure the efficient, stable, orderly and smooth operation of the market, the supervision of the market must be established under the principle of "three publics", "three publics" refers to fairness, openness and justice, which is the most basic principle of supervision.
* Supervision requires the comprehensive use of a variety of means, such as the establishment of a multi-level market, the improvement of the information disclosure system, and the strengthening of the supervision of the company's internal control. In addition, supervision also needs to rely on the support of laws and regulations, such as the first law, company law, administrative law, etc., to protect the legitimate rights and interests of shareholders and investors, and to punish institutions and individuals who do not comply with the regulations.
It has been 33 years since the establishment of China, and it stands to reason that it should have become a basically stable market, but this is not the case, and the current laws, regulations and regulatory systems of A-shares are still not perfect, and they are in a state full of holes and loopholes.
The current institutional loopholes in A-shares can be summarized as follows:
1. Fraudulent listing
Fraudulent issuance refers to the act of the issuer not meeting the issuance conditions and fraudulently obtaining the issuance approval. It breaks through the bottom line of good faith, ignores the authority of the law, and as one of the most serious fraud in the market, it has always been the main area of regulatory law enforcement by regulators in various countries.
Fraudulent issuance damages the legitimate rights and interests of investors, undermines the fairness, credibility and integrity of the market, violates the basic principles and rules of the market economy, disrupts the normal order and operation rules of the market, and affects the effective allocation of market resources. Fraudulent issuance makes investors unable to make rational investment decisions in the absence of true, complete and accurate information, and thus suffers losses in ** transactions.
Fraudulent listing behaviors are mainly manifested in:
In the IPO (initial public offering) link, gorgeous packaging listings, false disclosures and even fraudulent issuances occur from time to time, and repeated prohibitions occur.
1. There are false records in the information submitted or disclosed by the issuer, including fictitious business, inflated assets, income and profits, alteration or even forgery of property rights certificates and important business licenses, etc.
2. The content of the information submitted or disclosed by the issuer is inaccurate, the basis is insufficient, or the disclosure is selective or exaggerated, and there are misleading statements.
3. There are material omissions in the information submitted or disclosed by the issuer, including failure to disclose related party relationships and related party transactions, failure to disclose major changes in equity structure, failure to disclose material issues in terms of independence, failure to disclose material debts, defaults or external guarantees, etc.
4. The issuer fails to submit or disclose information in accordance with regulations, including failing to timely disclose major changes in production and operation, and failing to disclose the progress of major litigation or arbitration in a timely manner.
5. The sponsor institution and the sponsor representative have not fulfilled their sponsor duties, the prudent verification is insufficient, the professional control is not strict and insufficient, and the sponsorship letter issued has false records, misleading statements or major omissions.
6. Accounting firms, law firms, asset appraisal agencies and other first-class service intermediaries fail to fulfill their duties, be diligent and conscientious, and collude with the issuer to produce and issue false documents, make false records, misleading statements, or deliberately or indulge in major omissions or practice in violation of business rules.
Due to the loopholes in the regulatory system, the phenomenon of fraudulent listing of A-shares has occurred frequently over the years, and the fraudulent listed companies that have been exposed this year alone are: Xintai Electric, Hailianxun, Wanfu Shengke, Xindadi, Green Land, Shengjing Heshan, Zeda Yisheng, Amethystum Storage, etc.
One of the more typical is Amethystum Storage, which has been counterfeiting since 2017 and has only now been exposed. From 2017 to 2020, Amethystum Storage inflated its revenue by 76.6 billion yuan, inflated profit of 37.6 billion yuan. In order to conceal the world and ensure the purpose of listing, the company changed 4 audit institutions within two years, and it was not until the 5th financial auditor that an unqualified audit report was issued, and Amethystum Storage was able to be listed.
It can be seen that the "close cooperation" of intermediaries is an important reason why the fraudulent issuance of listed companies can succeed.
Second, break through with illness, and withdraw as soon as you check
Some listed companies know that the company has problems and does not meet the listing conditions, but they flock to submit application materials with a tentative and 'breakthrough' mentality, check a bunch of problems, and withdraw the application after checking. In order to profit from the listing, the sponsor lacks confidence in the quality of its practice, and they also know that there are problems with the sponsor project.
However, driven by profits, they still decided to take risks, because when the cost of illegal crimes in A-shares was low, they knew that the final result of the CSRC's handling of this was nothing more than "three glasses of fine wine". As a result, when the on-site supervision did not intervene, some sponsors still chose to "break through". In the final analysis, this is a game between the regulator and the regulated, and the latter tests the bottom line of the former by "passing through the test with illness".
3. IPO pricing mechanism
*Issuance** has an issue of overpricing the listing.
1. Net assets are not equal to capital, net assets = total assets - total liabilities, net assets per share = total assets and total share capital.
2. The number of shares issued is not equal to the total number of shares, but there will be assets amplified during the issuance of A shares, for example, the company's assets were originally only 100 yuan, and the issue price was calculated according to 20 yuan, and the issuance of ** raised 2000 yuan of funds, and the market value became 2000 yuan, which amplified the assets by 10 times.
3. New shares are listed, the stock price is "broken", and small and medium-sized investors become victims. Under the current T+1 trading system of A-shares, small and medium-sized investors cannot sell on the same day. When it's good, you can sell new shares to make money, and when it's bad, it's possible that the listing of new shares may "break", that is, fall below the issue price.
4. The correlation between stock price and net assets is not strong. For example, the original net assets are 100 yuan, if the issue price is calculated at 25 yuan, and 100 shares are issued, the company will raise 2500 yuan, and the net assets of the listed company are 100 + 2500 = 2600 yuan.
It can be seen that the correlation between stock price and net assets is not strong, due to the quality of the listed company itself, the market expectation is not good, and the stock price may "break the net" at any time after listing, that is, fall below the net assets per share.
Fourth, the actual controller and major shareholder of the listed company violated laws and regulations and maliciously cashed out
All kinds of malicious behaviors of A-share listed companies emerge in an endless stream, and the means are varied, which is jaw-dropping.
1. Pledge**
* It has become a great spectacle in China, and listed companies have almost no shares and no pledges!According to the data, in May 2018, the peak of the year, a total of 3,443 A-share companies had pledged their shares, accounting for 97 of the total number of A-share listed companies86%, to the point of "no shares, no pledge".
As of September 10 this year, there were a total of 2,442 A-share equity pledge companies, accounting for nearly 50% of the total number of listed companies, with a total market value of 28.5 billion yuan, of which 5,355 pledges by important shareholders have reached the liquidation line, accounting for 2483%, which is extremely dangerous.
2. Guarantee**
There are a large number of default guarantees, related party transactions, transfer of assets of listed companies, hollowing out of listed companies, and finally thunderstorms, and shares are sold or auctioned off.
3. Securities lending**
As soon as the restricted shares held by strategic investors are listed, they can be sold by securities lending, and the proportion of sharing is agreed, and the interested parties take over the order to sell in the secondary market, and then buy it back at a low price, and the difference is shared by the stakeholders, which perfectly realizes the disguise.
For example, on the day of the listing of Jindi shares, strategic investors became strategic short-sellers on the first day, in just a few days, the stock price was 50%, and the short-sellers made a net profit of 50%, making a profit of more than 100 million.
4. Lifting the ban**
Statistics show that A-shares have been 9075 trillion, the amount of major shareholders has exceeded the amount of IPO financing, which is 14 times.
In 2018, the IPO raised 137.8 billion yuan, with a fixed increase of 785.5 billion yuan, and the major shareholder **243.5 billion yuan, with 1 circle money578 trillion;
In 2019, the IPO raised 253.2 billion yuan, with a fixed increase of 689.8 billion yuan, 501.7 billion yuan of major shareholders, and 16529 trillion;
In 2020, the IPO raised 479.3 billion yuan, with a fixed increase of 78415.2 billion, major shareholders **851.3 billion, circle money 21147 trillion;
In 2021, the IPO raised 542.8 billion yuan, with a fixed increase of 89934.7 billion, major shareholders ** 714 billion, circle money 21561 trillion;
In 2022, the IPO will raise 586.9 billion yuan, with a fixed increase of 84578.8 billion, major shareholder **560.7 billion, circle money 199,343 trillion.
5. Forced liquidation**
6. Break into zero**
According to the regulations, the amount of major shareholders, directors, supervisors and senior executives through block trading** shall not exceed 2% of the company's total share capital within 90 consecutive natural days, and the transferee shall be locked for 6 months. Within 90 natural days, major shareholders, directors, supervisors and senior executives shall not exceed 1% of the total share capital through auction.
However, in this case, many listed companies are taking advantage of the loopholes in this system to play the side ball and step on the red line of time and proportion.
7. Divorce**
8. Release is good**
9. Use delisting and bankruptcy liquidation**
10. Circular split listing**
Due to the length of the article, the following is abbreviated.
Fifth, refinancing
Sixth, the CSRC's punishment for various violations of laws and regulations is too light, resulting in too low the cost of illegal activities of listed companies
7. Due to the lack of a short-selling mechanism, the current trading system is extremely unfair to small and medium-sized investors
In the 33 years since the establishment of A-shares, there has always been a problem of uneven profits for investors in the primary and secondary markets. The major shareholders and interest groups of listed companies can benefit from the primary market without any risk and from drought and flood protection.
And in the secondary market, they can make money either by going long or shorting. This is in stark contrast to the difficult survival state of the majority of small and medium-sized investors who bear huge investment risks and can only benefit from buying low and selling high in the secondary market. It can be seen from this that the current trading system of A-shares is extremely unfair to many **.
8. Market manipulation.
9. Insider Trading
The above is only a partial list, in fact, the loopholes of the A-share system are far more than that. It is the long-term existence of these loopholes that has led China to the situation it is in today. This also shows that China owes too many historical debts in terms of system construction, which eventually led to the total outbreak of this year's stock market crash.
The reason why A-shares have so many loopholes is due to the fact that China ** took "financing" as its primary purpose at the beginning of its establishmentAll the institutional settings of A-shares are centered on "financing".It is on the basis of this design that the investment function of the first class is ignored, and the protection of the legitimate rights and interests of the majority of investors is ignored, so there will be a series of institutional loopholes.
In fact, the entire A-share system is more favorable to the financier than to the investor. They have become completely vulnerable, and many of their basic demands have not been met.
Since the A-share system itself is set up to serve the financing party, in this case, the interests of the major shareholders and institutions of the listed company have been satisfied to the greatest extent, while the interests of the majority of small and medium-sized investors as investors have been ignored, and the legitimate rights and interests have not been properly protected.
Take delisting compensation as an example, A-shares, which have been established for 33 years, did not begin to compensate shareholders of delisted listed companies until this year, and the implementation of the compensation system was more than 30 years late!
In short, the loopholes in the system are an important factor that led to the stock market crash, and there is no set of scientific and rigorous systems to restrain and regulate the marketThe problem has accumulated for many years and has not been solved, and it is difficult to return, and finally it can only fall into a bear market state of ups and downs for a long time, which is also the fundamental reason why China has won the bottom of the global ranking for many years.