The basic characteristic of the registration system is to take information disclosure as the center. By requiring the issuer of securities to disclose the companys information truthfully, accurately and completely, investors can obtain the necessary information to judge the value of securities and make decisions on whether to invest. The securities regulatory body does not make decisions on the value and price of securities. Substantive judgement. The SFC said.
The CSRC also clearly defines the responsibilities of intermediaries. That is to say, intermediaries with sponsors as the main body need to make full use of their professional knowledge and experience, fully understand the operation situation and risks of issuers, conduct comprehensive verification and verification of information disclosure information of issuers, and make professional judgments for investors to make investment decisions.
As a very important market subject in the capital market, the importance of intermediaries has been mentioned to an unprecedented height. Over the past three decades, intermediaries have promoted the successful listing of more than 3,000 A-share companies and assisted in tens of thousands of mergers and acquisitions, which has played an irreplaceable role in the development of capital markets. However, it is undeniable that there are not a few institutions that violate laws and regulations.
On July 9, the First Center for Innovation Research of Finance and Economics launched the Credit and Beauty Risk Warning List (2008-2018) for intermediaries in Chinas A-share market. According to the information on penalties issued by the SFC, the securities firms, law firms, accounting institutes and evaluation institutions in major cases of Information Disclosure Violation were classified and counted. In order to play a warning role in the practice of intermediary institutions and promote the quality of information disclosure in Chinas capital market.
Several brokerages collect tickets
From early Yin Guangxia, Lantian Science and Technology to Wanfushengke, Xindi and Green Earth, to recent Xintai Electric and Yabat, typical cases of A-share financial fraud and fraudulent issuance have repeatedly shocked the market. Illegal listed companies are heavily punished by supervision, while intermediaries providing sponsorship, auditing, legal and evaluation services are also receiving regulatory fines.
The first financial reporter counted the intermediaries that were punished in the A-share market from 2008 to 2018 because of the illegal cases of information disclosure that aroused great concern in the market. Among them, 17 securities companies were heavily punished, namely, Xingye Securities, New Age Securities, Aijian Securities, Oriental Citigroup Securities, Zhongyuan Securities, Guoxin Securities and Guoxin Securities. Pingan Securities, Nanjing Securities, Anxin Securities, Huatai United Securities, Jinyuan Securities, China-Germany Securities, CIC Securities, Everbright Securities, Minsheng Securities, Xinda Securities, Southwest Securities.
In addition, whether Guangfa Securities will be punished in the Kangmei Pharmaceutical Case remains to be further investigated. However, a preliminary investigation by the SFC has confirmed that there are significant falsehoods in the financial reports disclosed by Kangmei Pharmaceutical Industry from 2016 to 2018, falsification of income through forged business vouchers, transfer of some funds into affiliated accounts to buy and sell shares of the company, while Guangfa Securities has been serving Kangmei Pharmaceutical Industry for 19 years.
In recent years, the supervision has become more and more strict, but the illegal cases of intermediaries still occur from time to time, and some securities firms are repeatedly punished for repeated offences.
In early June, New Age Securities, as an independent financial consultant for Beautiful Ecology to acquire 100% of Bada Gardens equity, and the principal underwriter for Beautiful Ecology to purchase assets and raise matching funds for non-public issuance, was not diligent in providing financial advisory services. There were misleading statements in its report, and the SFC made a statement to it.u201c No penalty three.
Two years ago, the New Age Securities Commission made a no penalty one decision because it acted as a sponsor in the case of Dengyun share IPO fraud by issuing a false record, misleading statement or major omission of the sponsor, or failing to perform other statutory duties.
In addition, there are also several cases involving Southwest Securities, including the case of Jiuhao Group and Anzhong Share Restructuring, the case of Dayou Energy Purchase, and the case of Ping An Securities involving Wanfushengke, Shengjingshan River and Hailian News.
Audit InstitutionsRisk Warning List
Among them, accounting firms include Zhonghua, Rianda, Lixin, Xinghua, Ruihua, Dahua, Asia-Pacific, Zhongxinghua, Zhongxinghua and Xinyongzhong.
Zhonghua Accounting Firm is the auditing institution involved in the major cross-border financial fraud case of Abbott. Because of the serious violation of the law, it is suspected that it constitutes the crime of violating the rules to disclose or not to disclose important information. The SFC has previously transferred Yabat and its related personnel to the public security organs for criminal responsibility. Zhonghua has also been seriously dealt with on suspicion of issuing documents containing false contents.
Lianda Accounting Firm is the most typical repeated penalties of the aforementioned audit institutions. From the inappropriate audit of Huayang science and technology related transaction in 2009, false report on Tianfeng energy-saving false profit from 2010 to 2012, unreserved opinion on Huarui Wind Power false profit in 2011, false audit report on Fujian Jinsen major assets restructuring in 2014, and unbeatable impairment of Saidi media goodwill in 2015. Due diligence, by 2016, Jiuhao Group issued a standard for three consecutive years of financial fraud without reservations, and Rianda was fined more than six times for breaking the law.
Previously, Lianda and two annotations were warned by Guizhou Securities Regulatory Bureau because of defects and defects in auditing the 2016 annual report of Shengjitang Pharmaceutical, a wholly-owned subsidiary of Chitianhua, Guizhou.
There are many illegal cases in Lixin Accounting Institute. Behind such cases as Jinya Science and Technology Fraud Issuance and Big Wisdom Annual Report Audit Failure, there are all cases of Lixin.
It is worth mentioning that Lixin was awarded joint and several liability by Shanghai High Court in the Great Wisdom case. The court held that Lixin, as a professional securities service organization, failed to carry out adequate and appropriate auditing procedures prudently and diligently in accordance with its professional standards and rules for major and abnormal situations found in the auditing process, and made appropriate adjustments to accounting principles, which led to the early recognition of revenue and false increase of sales revenue of Big Wisdom Company. Serious illegal acts such as false profit increase have not been disclosed in time, which has an inescapable responsibility for the occurrence of false statements by big wisdom companies. Credit has no evidence to prove that it is not at fault, and should bear joint and several liability with issuers and listed companies according to law.
Several other audit institutions are also involved in more serious cases of financial fraud. Among them, Beijing Xinghua Accounting Firm related to Xintai Electric IPO fraud, Ruihua Accounting Firm related to Huaze Cobalt and Nickel as well as Asia-Pacific industrial financial fraud, Xinyongzhong and Shedengyun share IPO fraud, Dahua Accounting Firm related to Jiadian share financial fraud, Asia-Pacific Accounting Firm related to Lianhua Weijing financial fraud.
Guangdong Zhengzhong Pearl River Accounting Firm is currently being investigated by the SFC for the Kangmei Pharmaceutical Case, and how to punish it remains to be further determined by the regulatory authorities. In addition, Ruihua Institute has just been investigating Kangdes new case.
There are also law firms and evaluation agencies.
The latest penalty was imposed on Beijing Dacheng Law Firm by the SFC on June 19, 2019. Dachengli, as the legal advisor of Guangdong Medias acquisition of Champs Elysees project, has made a false statement in the Legal Opinion.
In recent years, in addition to strengthening the supervision of securities firms, auditing institutions and law firms, the SFC has also increased its punishment on evaluation institutions year by year.
In May 2016, the Securities Regulatory Commission launched its first special law enforcement action against audit and evaluation agencies, and found that some of them had serious problems. Generally speaking, there are four common problems: lack of independence; inadequate implementation criteria; insufficient suspicion of practice; and unreasonable judgment of practice.
The supervision found that the inaction of audit and evaluation agencies has contributed to the momentum of false disclosure of listed companies. In this process, the evaluation agencies also involved five types of violations of laws and regulations. Firstly, there are major defects in the audit evaluation procedure and inadequate collection of important evidence such as transaction contracts; secondly, the important assumptions are unreasonable and the formulas are incorrect; thirdly, there is no reasonable doubt about the abnormal phenomena such as financial fraud of listed companies; fourthly, the audit evaluation process caters to the needs of clients and the practice procedure goes through the stage. Fifth, audit evaluation project review is formalized.
Typical cases include the false assessment report issued by Zhonglian Asset Valuation Group Co., Ltd. to Jiuhao Group, which was investigated and punished by the Securities Regulatory Commission.
On July 25, 2018, Bandung Assessment received the administrative penalty letter from Zhejiang Securities Regulatory Bureau, and became the first assessment institution to be punished by the local agency of the Securities Regulatory Commission. On July 26, 2018, the Beijing Securities Regulatory Bureau issued a written decision on administrative penalties, warning Beijing China Enterprise China Asset Assessment Co., Ltd. and four assessors.
In addition, Yinxin Asset Appraisal Co., Ltd. was not fined three by the SFC for its misleading statement on Baoqianlis Asset Appraisal Report; Guangdong Zhongguangxin Asset Appraisal Co., Ltd. issued false documents on the development of Rotton, and the SFC not fined three by the SFC; Beijing Zhongqianhua Asset Appraisal Co., Ltd. was not fined three by Guangdong Chuan. In the process of acquisition of Champs Elysees, media companies were not diligent and dutiful, and Beijing Zhongtonghua Asset Evaluation Co., Ltd. was not dutiful and dutiful in the acquisition of Dazhi subsidiary.
As an important participant in capital market investment and operation activities, intermediaries provide professional services such as sponsorship, auditing, law, evaluation and financial consultants, which are of great significance to safeguard the three principles of capital market. The diligent and diligent verification work of various intermediaries can effectively reduce the probability of financial fraud and effectively improve the quality of listed companies.
In January this year, the Securities Regulatory Commission has made a clear statement in the Opinions on the Implementation of the System of Scientific Creation and Pilot Registration in Shanghai Stock Exchange: sponsors, accounting firms, law firms and asset appraisal institutions responsible for false records, misleading statements or major omissions of issuers and listed companies. We should bear legal responsibility.
How to crack down on fraudulent issuance from administrative and criminal aspects under the registration system of Kechuang board? The twelfth question of the fifteenth question of the SFC gives a detailed answer to this question.
According to the SFC, the stock market is essentially an information-based trading market. The quality of information determines the direction of capital flow and the efficiency and effect of resource allocation. In order to truly implement the registration system of securities issuance with information disclosure as the core, KSB needs to further strengthen the supervision of information disclosure and severely crack down on illegal acts such as fraudulent issuance. At present, the SFC is actively taking advantage of the opportunity of law amendment to promote the national legislature to further strengthen the investigation of administrative and criminal legal liability for fraudulent issuance. At the same time, we should make good use of the social credit system to raise the cost of dishonesty in fraudulent issuance. In view of the short term of penalty for fraudulent issuance in the current Criminal Law, the CSRC is also cooperating with the legislature in supporting the amendment and improvement of the relevant provisions of the Criminal Law on fraudulent issuance, and has put forward suggestions for amendment and improvement to the relevant departments, including the extension of the term of imprisonment for fraudulent issuance. In order to increase the criminal liability of related criminal acts, the amount of fine should be high. Source: First Financial Responsibility Editor: Zhong Qiming_NF5619
According to the SFC, the stock market is essentially an information-based trading market. The quality of information determines the direction of capital flow and the efficiency and effect of resource allocation. In order to truly implement the registration system of securities issuance with information disclosure as the core, KSB needs to further strengthen the supervision of information disclosure and severely crack down on illegal acts such as fraudulent issuance.
At present, the SFC is actively taking advantage of the opportunity of law amendment to promote the national legislature to further strengthen the investigation of administrative and criminal legal liability for fraudulent issuance. At the same time, we should make good use of the social credit system to raise the cost of dishonesty in fraudulent issuance.