As the "gatekeeper" of the capital market, the diligence and diligence of intermediaries such as securities firms, accounting firms, law firms, and appraisal agencies is an important part of promoting the high-quality development of the capital market. However, driven by profits, some intermediaries and practitioners have violated professional ethics and engaged in illegal and undisciplined collusions, resulting in chaos in the capital market.
For this reason, after the new leaders of the China Securities Regulatory Commission took office, "a fire" burned to intermediaries. According to incomplete statistics, since 2024, nearly 50 intermediaries have received various fines issued by the China Securities Regulatory Commission and the Shanghai and Shenzhen Stock Exchanges.
Merchants **violation** employees were "one pot end".
On Chinese New Year's Eve, regulators issued a wave of fines on the last trading day before the Spring Festival. As many as 63 employees of China Merchants were administratively punished for violating regulations, and a total fine of 81.73 million yuan was imposed, shocking the market.
It is surprising that in this violation of laws and regulations, China Merchants ** from President Xiong Jiantao to ordinary employees, including Sun Jian, then director of the investment bank headquarters, Xin Xin, deputy general manager of the wealth management department, and many legal persons and investment consultants of the business department of securities companies are violating the rules.
According to public information, Xiong Jiantao joined China Merchants in June 1995 and served as the chief information officer, chief operating officer, vice president, president and chairman of China Merchants Asset Management, before resigning in October 2021. Since 1995, Xiong Jiantao has violated transactions through the accounts of "Xiong Jiantao", "Ren Mouli" and "Cui Mouli", and the violation time has been as long as 26 years. During this period, Xiong Jiantao's total transaction amount was 51.9 billion yuan, with a profit of 335660,000 yuan.
In this punishment, an employee named Guo Haopeng has the highest total amount of illegal transactions since 2009 after he took up his post in China Merchants **, reaching 85.8 billion yuan, but a loss of 3.64 million yuan, was ordered to deal with the illegally held ** in accordance with the law and imposed a fine of 250,000 yuan.
Xiong Jiantao was banned from the market for life because of the long duration of the illegal acts, the large transaction amount and the profit amount, and the circumstances were particularly serious. Another 1 person was transferred to the judicial authorities for handling on suspicion of insider trading; 46 people were taken administrative supervision measures, 3 people were identified as inappropriate persons, 5 people were supervised for interviews, and 38 people were issued warning letters.
According to industry insiders, the behavior of brokerage employees is more common, but due to its strong concealment, it is difficult for the early regulatory authorities to find out. However, in recent years, with the development of regulatory technology, not only violations, but also some hidden violations of laws and regulations of intermediaries have gradually surfaced.
At the first offline press conference in 2024, Li Ming, chief inspector and director of the inspection bureau of the China Securities Regulatory Commission, said that the China Securities Regulatory Commission will build a "penetrating" clue screening system through multi-dimensional technical means such as all-round monitoring, big data collision, multi-channel collection, and intelligent analysis, so as to accurately identify and crack down on market manipulation and insider trading.
Under the "penetrating" supervision, China Merchants has been found to have committed a number of violations in recent years, including employee violations, "rat traps", insider trading, misleading statements in investment banking projects, etc.
Compliance issues have a significant adverse impact on the business
The huge fine not only brings direct economic losses, but also has a significant adverse impact on the business development of China Merchants **. In the new round of "white list" of ** companies released by the China Securities Regulatory Commission in June 2023, 4 securities firms of China Merchants were transferred out of the "white list".
*The company's "white list" is mainly adjusted regularly based on the company's compliance, risk control and business risks. After being included in the "white list", the regulatory authorities will cancel the procedures for issuing regulatory opinions on matters such as listing and financing, bond issuance, etc., or simplify the issuance process, and require companies that carry out innovative pilot business to be selected from the "white list". The brokerages that have been transferred out of the "white list" have no relevant "benefits", which will undoubtedly weaken the company's competitiveness.
In the past two years, when internal control and compliance have been frequently "chaotic", the performance of China Merchants ** has declined significantly, and the operating income will be 192 in 20221.9 billion yuan, down 3469%；Net profit attributable to shareholders of the parent company was 807.2 billion yuan, a year-on-year decrease of 3068%。In the first three quarters of 2023, the operating income was 1487.1 billion yuan, down 279%；Net profit attributable to shareholders of listed companies was 640.2 billion yuan, an increase of only 1 year-on-year90%。
Judging from the 2023 semi-annual report, the performance of several core business segments of China Merchants has contracted to varying degrees, especially the investment banking business.
According to the data, in the first half of 2023, the net income of China Merchants ** fees and commissions will be 413.1 billion yuan, a year-on-year decrease of 1686%, of which 293.3 billion yuan, down 10 percent year-on-year72%, mainly due to the decrease in the net income of **trading** business due to the decrease in the company's commission rate; Net investment banking fee income44.7 billion yuan, a year-on-year decrease of 4443%, mainly due to the decrease in IPO revenue; Net fee income from asset management business37.2 billion yuan, down 1323%, mainly due to a decrease in AUM.
Behind the "halving" of China Merchants **'s investment banking business, it is also related to internal control and compliance. In September 2022, when China Merchants ** provided financial advisory services for China Security Branch Co., Ltd., due to the failure to be diligent and conscientious in the performance of duties, the "Independent Financial Adviser Report" issued was misleading, and it failed to pay close attention to the subsequent changes in the parties to the merger and reorganization that had a greater impact on the restructuring.
To this end, the China Securities Regulatory Commission ordered China Merchants ** to correct the illegal acts, confiscate business income of 31.5 million yuan, and impose a fine of 31.5 million yuan. Affected by this, more than 20 IPO projects of the companies sponsored by China Merchants ** were "suspended from review". Although the regulatory authorities did not directly suspend its sponsorship qualifications, it had a considerable impact on its investment banking business. (Contents**|.)Huabo Business Review).