The China Securities Regulatory Commission (CSRC) made history recently when it punished Ping An Securities for failing to conduct adequate due diligence while backing the initial public offering of Wanfu Biotechnology (Hunan) Agricultural Development Co, a company which admitted to falsifying financial information in its listing application. Ping An will be fined 76.65 million yuan ($12.49 million) and will see its sponsorship qualification suspended for three months.

Ping An also announced that it will establish a 300-million-yuan fund to compensate investors who suffered losses from buying into Wanfu's stocks. Many have praised Ping An's move and believe that its fund may set an important precedent for when similar cases arise in the future.

However investors are still worried that Wanfu will not be delisted. Even though investors may be reimbursed, this doesn't mean that regulators should let Wanfu keep trading after it has been found cheating. Such indulgence sends a bad message about fraud and its consequences.

The author is Li Jixian, a senior partner at Beijing-based Yingke Law Firm.