China Securities Regulatory Commission gives written warning to China Merchants Securities

category:Finance
 China Securities Regulatory Commission gives written warning to China Merchants Securities


At the same time, the Shanghai Stock Exchange issued a regulatory warning letter to China Merchants Securities. The Shanghai Stock Exchange identified that during the period when China Merchants Securities was underwriting and acting as the trustee of brilliance Automobile Group Holding Co., Ltd. in 2017 non-public issuance of corporate bonds (phase II) (hereinafter referred to as 17 Huaqi 05 bonds), there were violations such as failure to timely perform the trustees duty of information disclosure and failure to effectively perform the trustees credit risk management responsibility.

On October 23, 2020, the company bond 17 Huaqi 05 bond privately issued by brilliance group in Shanghai Stock Exchange in October 2017 failed to be paid in full and on time. The bond was underwritten by China Merchants Securities and acted as the trustee.

It is reported that on November 2, 2020, the bond business center of Shanghai Stock Exchange issued a written warning to brilliance group for its information disclosure violations. The Shanghai Stock Exchange found that, as the trustee of the current bonds, China Merchants Securities failed to timely perform the duty of information disclosure and failed to effectively perform the duty of credit risk management during the existence of 17 Huaqi 05 bonds.

According to the information just released on the official website of the Securities Regulatory Commission, the recent default of brilliance group on bonds has aroused market attention. China Securities Regulatory Commission (CSRC) has carried out special inspection on it in accordance with the law. According to the inspection results, it has taken administrative supervision measures to issue warning letters to brilliance group, and decided to file a case to investigate its suspected illegal information disclosure, conduct synchronous inspection on intermediary agencies involved in relevant bonds of brilliance group, and seriously investigate and punish relevant illegal behaviors.

According to the information on the official website of the CSRC, the CSRC attaches great importance to the protection of the legitimate rights and interests of investors, comprehensively implements the zero tolerance requirement of the financial commission of the State Council, severely crack down on all kinds of illegal behaviors in accordance with the law, and maintain a good order of the bond market. At the same time, we will continue to maintain and give full play to the normal functions of the bond market, and support enterprises of all types of ownership to develop financing through the bond market in accordance with the law.

In the next step, the CSRC will do a good job in supervision in accordance with the law, firmly hold the bottom line of no systemic risk, deepen reform, improve the system, implement responsibilities and strict supervision, so as to promote the stable and healthy development of the bond market.

Shanghai Stock Exchange Issues regulatory warning letter on China Merchants Securities

According to the warning letter, the Shanghai Stock Exchange found that China Merchants Securities had the following two violations in the process of entrusted management of 17 Huaqi 05 bonds:

Failing to perform the duty of information disclosure of the trustee in time.

In 2020, brilliance group has successively suffered from self-discipline supervision measures criticized by the Shanghai Stock Exchange, failure to pay off due debts on time, major litigation and judicial freezing of relevant assets, equity transfer of important subsidiary Brilliance China Automobile Holding Co., Ltd., which affect its debt repayment ability. As the trustee of the bonds, China Merchants Securities failed to fulfill the duties of the trustee and failed to issue and disclose the temporary entrusted management affairs report in time.

Failure to effectively perform the trustees credit risk management responsibilities.

According to the prospectus, 17 Huaqi 05 debt shall be due and paid on October 23, 2020. Up to now, brilliance group has not yet completed the principal payment of 17 Huaqi 05 bonds. As the trustee of the current bond, China Merchants Securities failed to timely and effectively track, monitor, investigate and warn the significant adverse changes in liquidity risk and solvency of brilliance group, and failed to timely adjust the bond risk classification when there was a significant debt repayment risk in 17 Huaqi 05 bonds.

The Shanghai Stock Exchange believes that the above behaviors of China Merchants Securities violate articles 1.6, 3.3.5 and 4.2.3 of the Listing Rules of Shanghai stock exchange for the listing and transfer of corporate bonds of non public development banks (hereinafter referred to as the Listing Rules), and articles 6, 9 and 18 of the credit risk management guidelines for the duration of corporate bonds of Shanghai Stock Exchange (Trial) (hereinafter referred to as the risk management guidelines) Article 21 and Article 33. In view of the nature and circumstances of the above-mentioned behaviors, in accordance with articles 1.8, 6.2 and 6.3 of the listing rules and Article 56 of the risk management guidelines, the Shanghai Stock Exchange decided to give a written warning to China Merchants Securities. The Shanghai stock exchange requires China Merchants Securities to take a warning, strengthen the entrusted management of corporate bonds in strict accordance with the regulations and agreements, earnestly perform the duty of entrusted management, timely perform the obligation of information disclosure, effectively protect the legitimate rights and interests of bond holders, and maintain the normal order of the bond market. It is reported that the Shanghai Stock Exchange will continue to pay attention to the rectification of violations of China Merchants Securities. If other violations are found in the company, the Shanghai Stock Exchange will further take self-discipline supervision measures according to the situation. Editor: Zhu Yin Securities Regulatory Commission: investigation of brilliance automobile case and extended reading of relevant measures taken by China Securities Regulatory Commission on brilliance automobile group and related intermediary agencies_ NF5619

The Shanghai Stock Exchange believes that the above behaviors of China Merchants Securities violate articles 1.6, 3.3.5 and 4.2.3 of the Listing Rules of Shanghai stock exchange for the listing and transfer of corporate bonds of non public development banks (hereinafter referred to as the Listing Rules), and articles 6, 9 and 18 of the credit risk management guidelines for the duration of corporate bonds of Shanghai Stock Exchange (Trial) (hereinafter referred to as the risk management guidelines) Article 21 and Article 33.

In view of the nature and circumstances of the above-mentioned behaviors, in accordance with articles 1.8, 6.2 and 6.3 of the listing rules and Article 56 of the risk management guidelines, the Shanghai Stock Exchange decided to give a written warning to China Merchants Securities.

The Shanghai stock exchange requires China Merchants Securities to take a warning, strengthen the entrusted management of corporate bonds in strict accordance with the regulations and agreements, earnestly perform the duty of entrusted management, timely perform the obligation of information disclosure, effectively protect the legitimate rights and interests of bond holders, and maintain the normal order of the bond market.

It is reported that the Shanghai Stock Exchange will continue to pay attention to the rectification of violations of China Merchants Securities. If other violations are found in the company, the Shanghai Stock Exchange will further take self-discipline supervision measures according to the situation.

Editor: Zhu Yin

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