The China Securities Regulatory Commission issued a large fine aimed directly at this brokerage. On February 18, a reporter from Beijing Business Daily paid attention to the fact that the China Securities Regulatory Commission recently issued a document pointing out that it would focus on investigating and prosecuting violations of laws and regulations such as buying and selling by many employees, specifically, 63 employees were fined, involving an amount of 81.73 million yuan. In addition to the above violations, since February, the management of the China Merchants ** Business Department and the management of bond trustees have also stepped on the red line and have been "named" by the regulators. Industry insiders said that the supervision has enhanced the deterrent effect of law enforcement with the regulatory efficiency and accuracy of "three-dimensional punishment", and further maintained the healthy and stable development of the market. The relevant securities firms involved also need to further strengthen compliance inspections and improve compliance levels.
Employees are subject to heavy fines for illegal trading**
A number of employees were dealt with centrally. On February 18, a reporter from Beijing Business Daily paid attention to the fact that the China Securities Regulatory Commission recently issued a document pointing out that it would focus on investigating and prosecuting violations of laws and regulations such as investment promotion and trading by multiple practitioners. Rely on criminal accountability, administrative punishments, administrative supervision measures, and internal accountability to carry out three-dimensional punishments.
Specifically, the China Securities Regulatory Commission imposed administrative penalties on 63 people, with a total fine of 81.73 million yuan, imposed a lifetime market ban on 1 person, transferred 1 person suspected of insider trading to the judicial authorities for processing, and also took administrative supervision measures against 46 people, of which 3 were identified as inappropriate persons, 5 were supervised and talked, and 38 were issued warning letters.
On the same day that the China Securities Regulatory Commission issued an announcement, the Shenzhen Securities Regulatory Bureau also disclosed a number of fines, specifically showing the violations of investment promotion practitioners. The Shenzhen Securities Regulatory Bureau pointed out that many employees of China Merchants had borrowed other people's **accounts for long-term transactions**, privately accepted customer entrustment transactions**, and entrusted others** and other violations of laws and regulations, which were mainly concentrated before 2021.
The Shenzhen Securities Regulatory Bureau further pointed out that during the above-mentioned period, there was insufficient attention and accountability to the trading behavior of employees. The frequency of routine and special inspections is low, and the continuous supervision and warning education of employee behavior are insufficient; Employee behavior monitoring, monitoring and management are not in place. The accuracy and completeness of information such as employees' mobile phone numbers are not checked, checked and updated in a timely manner. Failing to pay sufficient attention to employees' logging into other people's accounts and borrowing relatives or other people's accounts to buy and sell**; The construction of supporting information technology systems is insufficient. **There are defects in the data recording of the account terminal, and the collection of customer information is incomplete and untimely. In summary, China Merchants was ordered to increase the number of internal compliance inspections.
During the same period, Huo Da, chairman of China Merchants **, a number of then and current managers and related responsible persons also could not escape their responsibilities, and were respectively taken by the Shenzhen Securities Regulatory Bureau to issue warning letters, regulatory interviews and regulatory measures identified as inappropriate persons.
According to Article 40 of the ** Law of the People's Republic of China, the employees of ** trading venues, ** companies and ** registration and clearing institutions, the staff of ** supervision and management institutions and other personnel who are prohibited from participating in ** transactions by laws and administrative regulations shall not hold, buy or sell ** or other equity properties directly or under a pseudonym or in the name of others during the term of office or statutory period, nor shall they accept gifts from others ** or other ** with equity nature.
Lu Dingliang, a partner of Beijing Jingshi Law Firm, pointed out that the inspection, law enforcement and regulatory punishment of the China Securities Regulatory Commission and local securities regulatory bureaus on illegal trading of practitioners reflect the "zero tolerance" attitude of the regulatory authorities to strictly crack down on relevant illegal personnel in accordance with the law, increase the cost of illegal activities with the strong crackdown of "expelling from the market", and enhance the deterrent effect of law enforcement with the regulatory efficiency and accuracy of "three-dimensional punishment", and further maintain the healthy and stable development of the market.
Compliance training needs to be highly valued
In addition to illegal trading by employees, China Merchants also stepped on the red line in other businesses. On February 9, the business department of China Merchants ** Nanyou Avenue in Nanshan, Shenzhen, was "named" by the regulator for some employees who privately entrusted others to solicit customers from 2021 to 2022. On February 2, China Merchants ** was also issued a warning letter by the Anhui Securities Regulatory Bureau for failing to supervise the issuer to do a good job in the management of raised funds and failing to continuously track and supervise the issuer's performance of the interim reporting obligations related to the disclosure of information in the entrusted management of the "15 cities and six bureaus" bonds.
According to the company's official website, China Merchants ** was established in August 1993 and listed on the main board of the Shanghai Stock Exchange in November 2009. On February 18, China Merchants ** released a performance express report, stating that it will achieve a total operating income of 197 in 20239.5 billion yuan, a year-on-year increase of 3%; The net profit attributable to the parent company was 874.4 billion yuan, a year-on-year increase of 835%。
Looking back at the end of the third quarter of 2023, the operating income and net profit attributable to the parent company of China Merchants ** were 1487.1 billion yuan, 640.2 billion yuan, ranking high among the 43 directly listed brokerages, ranking 10th and 5th respectively.
Regarding the possible impact of receiving regulatory fines on the company's business, management and performance, a reporter from Beijing Business Daily issued an interview with China Merchants **, but did not receive a reply as of press time.
Jiang Han, a senior researcher at Pangu Think Tank, pointed out that receiving multiple fines may affect the company's reputation, leading to a decline in customer trust, which in turn affects the company's customer churn rate and the acquisition of new customers. Second, companies subject to regulatory penalties may face greater regulatory scrutiny, increasing compliance costs and operational difficulties. In addition, the fines themselves can have a direct impact on the company's financial health. In the long run, if the internal management and compliance culture are not effectively improved, it may affect the company's long-term development and market competitiveness.
Lu Dingliang also said that relevant securities firms also need to further strengthen compliance inspections, attach great importance to compliance training, and further improve the level of compliance.
It is worth noting that after the issuance of the fine, China Merchants ** also issued a document stating that it firmly supports the penalty decision of the China Securities Regulatory Commission, and has started with the education of new employees, requiring all employees not to open **account trading in violation of regulations**, and strengthen control through **account monitoring and audit on a daily basis.