On the road of civil and criminal accountability

category:Finance
 On the road of civil and criminal accountability


Top penalty plus market ban

For cases where the illegal acts did occur before the implementation of the new securities law and are still in the stage of investigation and trial, we will adhere to the administration according to law and implement the laws and regulations when the illegal acts occurred, but we will implement the spirit of the new securities law, deal with them strictly and seriously, and at the same time, we will promptly promote the settlement of accumulated cases. We will strictly punish those illegal acts that started before March 1 but are still happening and causing serious harm in strict accordance with the provisions of the new securities law. On May 15, Yi Huiman, chairman of the CSRC, said at the May 15 national Investor Protection Publicity Day.

On the evening of the 14th, the CSRC announced the decision of punishment and prohibition on Kangmei pharmaceutical industry. The CSRC finally determined that during the period from 2016 to 2018, Kangmei Pharmaceutical Co., Ltd. falsely increased its huge operating revenue, falsely increased its monetary capital by means of forging and altering large amount fixed deposit certificates, etc., incorporated engineering projects that did not meet the accounting recognition and measurement conditions into the statements, falsely increased its fixed assets, etc. At the same time, Kangmei Pharmaceutical Co., Ltd. also has the situation that the controlling shareholders and their related parties occupy funds for non business purposes.

According to the previous investigation of CSRC, Kangmei Pharmaceutical Co., Ltd. falsely increased its business income in 2016, 2017 and 2018 eighty-nine point nine nine Billion yuan one hundred point three two Billion yuan eighty-four point eight four 100 million yuan, and the operating profit increased in vain are respectively six point five six Billion yuan twelve point five one Billion yuan twenty point two nine Billion yuan.

While imposing a fine on Kangmei company, the CSRC will impose a corresponding fine on the actual controller and all directors and supervisors involved in the case, totaling 5.95 million yuan. At the same time, the main responsible persons have taken the measures of banning access to the securities market, and they will not be allowed to hold positions in listed companies and other institutions in the future.

Liu Junhai, a professor at the Law School of Renmin University of China and director of the Institute of business law of Renmin University of China, said that in order to maintain the legal credibility of the capital market before the new law, the violation should be handled in accordance with the principle that the new law does not go back to the past. Although the previous Securities Law provided for less administrative penalties, there are still criminal and civil liabilities, as well as the consequences of dishonest sanctions.

It is not the end point for Kangmei pharmaceutical industry to receive the administrative punishment from the CSRC. With the promulgation and implementation of the new securities law and the continuous promotion of capital market reform, the cost of illegal securities such as financial fraud will be greatly increased. After the decision of administrative penalty is made, relevant responsible units and personnel will also face civil litigation claims from investors, paying a higher price.

The official implementation of the CSRCs administrative punishment on Kangmei pharmaceutical means that investors who have lost money due to the forgery of Kangmei pharmaceutical can claim compensation through legal channels. As of May 16, Sinas shareholder rights protection platform registered that more than 5600 investors had proposed to claim compensation from Kangmei pharmaceutical.

In recent years, investors awareness of safeguarding rights has become higher and higher. After most cases of administrative punishment are closed, investors file civil compensation litigation and resort to legal weapons to safeguard their rights. Relevant law firms and lawyers participate in it and play a positive role. Taking Fangzheng science and technology false statement case as an example, after the administrative penalty was imposed, Shanghai financial court accepted more than 1300 cases involving more than 1000 investors, and the company paid more than 70 million yuan through demonstration judgment and mediation. After being punished by the CSRC, more than 100 investors received compensation of more than 49 million yuan through civil litigation. After the CSRC imposed an administrative penalty on ZhongYiDa, the relevant personnel were transferred to the judicial organ for criminal responsibility, and then were sentenced to constitute the crime of illegal disclosure of important information.

In addition, the reporter of the financial times also learned that the CSRC had transferred the suspected criminal act to the judicial organ for the first time in the process of case investigation. The CSRC will continue to cooperate with the judicial authorities to investigate and deal with the Kangmei pharmaceutical case, and the relevant personnel will be subject to criminal prosecution.

At present, the new securities law has been promulgated and implemented, and the amount of fines has been greatly increased. If the information disclosed by the relevant subjects has false records, misleading statements or major omissions, a maximum fine of 10 million yuan can be imposed. On the basis of the substantial increase of administrative responsibility, CSRC will also actively promote the relevant departments to improve the criminal crackdown.

Intermediaries will also face strict accountability

At present, although the main case of Kangmei Pharmaceutical Co., Ltd. has been heard, the accountability of relevant intermediary agencies has not stopped, and the relevant cases are under investigation. The CSRC said it would further speed up the trial process, strictly pursue responsibility and respond to social concerns in a timely manner.

As the gatekeeper of the capital market, intermediary agencies play an important role in the quality of recommendation, accounting audit, compliance audit, credit rating, etc. Intermediary agencies should abide by professional ethics and stick to the bottom line of integrity. The CSRC will strictly punish the intermediary institutions that have changed from gatekeepers to liberators or even provide convenience for financial fraud.

In 2019, China Securities Regulatory Commission strengthened the supervision of intermediary service agencies, and took administrative supervision measures for 2 law firms and 12 lawyers, and for 1 accounting firm and 6 Certified Public Accountants.

Pan Xiangdong, chief economist of securities in the new era, believes that the new securities law has compacted the legal responsibilities of the gatekeeper of the intermediary institutions, mainly by increasing the penalties for violations of laws and regulations, forcing the intermediary institutions to improve the level of self-discipline. The implementation aims to strengthen the risk management level of the securities service business of the intermediary institutions and establish the self-restraint mechanism of the intermediary institutions.