Whereas, Shanghai Huaxin Securities Co., Ltd. (hereinafter referred to as Huaxin securities) has failed to provide financing for the shareholder Shanghai Huaxin International Group Co., Ltd. and its related parties, illegally carried out asset management business, net capital and other risk control indicators, which are not in line with the provisions of going concern securities business, and failed to correct within the time limit, seriously damaging the legitimate rights and interests of customers, and endangering the stable operation of the company. In accordance with the relevant provisions of the securities law, the regulations on the supervision and administration of securities companies, and the regulations on the risk disposal of securities companies, the CSRC decided to revoke all business licenses of Huaxin securities on November 15, 2019, and entrusted Guohao law firm (Beijing) to establish an administrative liquidation team to conduct administrative liquidation of Huaxin securities. During the period of administrative liquidation, China Securities Regulatory Commission entrusted Guotai Junan Securities Co., Ltd. to custody the securities brokerage and other businesses involving customers of Huaxin securities. At the same time, the CSRC dispatched a risk disposal field working group to supervise and guide the Huaxin securities, the administrative liquidation group and the custody group. In principle, the period of administrative liquidation shall not exceed 12 months.
In response to the illegal behaviors of Huaxin securities, the CSRC has taken regulatory measures such as restricting shareholders rights, suspending asset management business and ordering them to make corrections between May and August 2018. In August 2018, China Securities Regulatory Commission filed and inspected Huaxin securities. Up to now, Huaxin securities has not corrected the relevant violations. On November 15, 2019, the CSRC made the administrative penalty and corresponding regulatory measures for revoking all business licenses of Huaxin securities.
Since the outbreak of illegal risks of Huaxin securities, the CSRC has sent a risk monitoring team to Huaxin securities to conduct special inspection and monitor the operation and management of the company. At present, the business of Huaxin securities has shrunk in an all-round way, the risk has been effectively isolated, the customers assets are safe, the inter-bank business is closed, and the employees are basically stable. During the administrative liquidation, the trusteeship team will continue to guarantee the normal operation of securities brokerage and other businesses and maintain the continuity and stability of the existing businesses; the administrative liquidation team will organize the transfer of securities assets according to law and properly arrange customers and employees.
At present, the overall operation of the securities industry is standardized, with sufficient capital and strong anti risk ability. The risk disposal of Huaxin securities belongs to a case. In the next step, the CSRC will steadily promote the disposal, protect the legitimate rights and interests of customers and related parties according to law, and effectively maintain the healthy and stable development of the capital market.
Source: China Securities Regulatory Commission, editor in charge: Zhong Qiming, nf5619