Another brokerage firm was fined for its asset management business.
Before the holiday, the three fines announced by the Shenzhen Securities Regulatory Bureau were all related to Zhongshan**. The business fined this time is a private asset management business, which involves an imperfect control mechanism for related-party transactions, lax internal control over the investment product pool, and an imperfect salary deferred payment mechanism.
Zhongshan** was ordered to make corrections by the CSRC, and the then chief compliance officer and then vice president in charge of asset management business were both issued "fines", and the above two persons have left Zhongshan**.
In the past year, the Shenzhen Securities Regulatory Bureau has punished a number of securities firms in its jurisdiction for their private asset management business. It is worth noting that most of the fines imposed on the asset management business of a number of securities firms, including Zhongshan**, are related to bond transactions, such as the management system for related party transactions has not fully functioned.
Four major problem violations
According to the fine disclosed by the Shenzhen Securities Regulatory Bureau on February 9, the regulator found that Zhongshan**'s private asset management business had a number of problems.
First, the control mechanism for related-party transactions is not perfect, and the relevant mechanisms for the identification of related party entities, the monitoring of the transaction system, and the approval and evaluation of related-party transactions are not perfect.
Second, the internal control over the establishment and maintenance of investment product pools, investment decision-making, and transaction execution is not strict.
Third, the compliance management of asset management product publicity, management fee setting, and information publicity is insufficient.
Fourth, the salary deferred payment mechanism and the relevant business systems of private equity asset management are not perfect or updated in a timely manner and are not effectively implemented.
According to the Administrative Measures for the Private Asset Management Business of ** Operating Institutions (hereinafter referred to as the "Measures"), the disclosure of asset management plan information shall not exaggerate or one-sidedly publicize the past performance of managers, investment managers and the asset management plans they manage.
The "Measures" also stated that the first business institution shall establish and improve the management system for related party transactions, standardize the identification standards, transaction pricing methods and transaction approval procedures of related party transactions, and shall not use the assets of the asset management plan to engage in improper transactions, benefit transfer, insider trading and market manipulation with related parties.
The Provisions on the Operation and Administration of Private Asset Management Plans of ** Business Institutions mentions that ** business institutions shall establish a revenue deferred payment mechanism for the main business personnel and relevant management personnel of the private asset management business, and reasonably determine the income deferred payment standards, deferred payment period and proportion. In principle, the deferred payment period shall not be less than 3 years, and the amount of deferred payment shall not be less than 40% in principle.
It is worth noting that the Shenzhen Securities Regulatory Bureau pointed out that Zhongshan** also violated Article 2, Paragraph 3 of the Notice on Regulating the Bond Trading Business of Bond Market Participants (hereinafter referred to as the "Notice"), which means that the specific circumstances of its private asset management business being fined involve bond trading.
Specifically, the Notice states that participants should strengthen internal control and risk management in accordance with the relevant regulations of the financial regulatory authorities, and improve the compliance system for bond trading. Among them, "the middle and back office business departments of participants, such as compliance management, risk control, clearing and settlement, and financial accounting, should fully grasp the bond transactions of the front office departments, and strengthen the compliance and risk control of bond transactions." ”
The Shenzhen Securities Regulatory Bureau stated that based on the above problems, it took administrative supervision measures to order Zhongshan to make corrections. The Shenzhen Securities Regulatory Bureau pointed out that Zhongshan should conduct in-depth rectification of the above-mentioned relevant issues, effectively improve the compliance operation level of private asset management business, and submit a written rectification report.
Two of the then-senior executives were fined
The relevant executives of Zhongshan ** could not escape the blame for the above problems and were also punished by the Shenzhen Securities Regulatory Bureau.
According to the announcement, Yuan Ling, as the then compliance director of Zhongshan**, did not manage the compliance and internal control of Zhongshan**'s private equity asset management business in place, and the Shenzhen Securities Regulatory Bureau decided to take administrative supervision measures to issue a warning letter to her. Zhao Bo, as the vice president in charge of asset management business and the head of the asset management department at the time, was responsible for the management of the above issues. The Shenzhen Securities Regulatory Bureau decided to take administrative supervision measures against it.
According to the brokerage China reporter's inquiry about the information of the practitioners of the China ** Industry Association, it was noticed that the above two people had left Zhongshan**.
In the past year, Zhongshan**'s asset management business has been mediocre and its profit scale is small. According to the unaudited financial report disclosed by Jinlong in January this year, the net fee income of Zhongshan**'s asset management business in 2023 is only 749770,000 yuan, compared with 1729 in the same period last year780,000 yuan, a year-on-year "halved".
A number of securities companies were fined for bond trading
In fact, in the past year, the Shenzhen Securities Regulatory Bureau has issued fines to a number of securities firms in its jurisdiction for their private asset management business. The reporter noted that most of the private asset management business of these brokerages involved bond trading.
In November 2023, some of Guosheng Asset Management*** hereinafter referred to as "Guosheng Asset Management") had problems such as due diligence as a formality, insufficient internal control, excessive incentives, non-standard sales management, and inaccurate information disclosure.
In June 2023, the Shenzhen Securities Regulatory Bureau issued a number of decisions on administrative supervision measures, detailing the violations of the private asset management business of the two securities firms.
Specifically, the operation of Minmetals**'s private asset management business was not standardized, such as problems in bond investment decision-making and risk control, individual products exceeded the internal leverage limit according to the client's requirements, and the investment manager participated in the inquiry and invested in the bonds in the list provided by the client and some of them were related bonds of the ultimate investor. Another example is that the investment management of non-standard assets is not standardized, and individual products provide convenience for banking institutions to finance related parties. The Shenzhen Securities Regulatory Bureau also pointed out that the internal control mechanism of Minmetals' ** bond business is not perfect. To this end, the regulatory authorities ordered the brokerage firm to make corrections and suspended the filing of its new private asset management products for 6 months.
Yintai **'s private asset management business has five problems: First, the rectification of individual asset management products is not in place, and the impairment provision of asset management products is insufficient. Second, the staffing of the asset management department does not meet the requirements and the independence of individual personnel in business is insufficient. Third, the relevant system of private asset management is not perfect, the management system of related party transactions does not stipulate the investment custodian, and the relevant system for the management of bond investment counterparties has not been established. Fourth, the investment alternative pool into the pool, the establishment and maintenance of the library, and the management of trading instructions are not standardized. Fifth, the risk control and compliance management is not in place, the centralized trading room is not effectively monitored, individual risk control indicators are not included in the system monitoring, and there is a lack of individual quarterly stress test reports.
Editor-in-charge: Yang Yucheng.
Proofreading: Su Huanwen.