China's securities regulator intensifies crackdown on IPO fraud, misconduct by securities practitioners
Published: Feb 09, 2024 05:51 PM
China Securities Regulatory Commission (CSRC) in Beijing Photo:VCG

China Securities Regulatory Commission (CSRC) in Beijing Photo:VCG

The China Securities Regulatory Commission (CSRC) released a list of penalties on Friday involving IPO fraud and illegal stock trading by industry professionals. The list, which comes on the eve of the Chinese Lunar New Year, signifies a strong regulatory stance aimed at stabilizing the market, experts said.

The penalty list includes a fine of 16.5 million yuan ($3.13 million) for the IPO fraud committed by semiconductor startup S2C EDA, which was found to have inflated their earnings during its IPO application on the STAR market in 2021. The company withdrew from the IPO listing in July of 2022.

In another recent investigation, the CSRC fined 63 securities professionals from China Merchants Securities Co involved in illegal stock trading and imposed penalties totaling 81.73 million yuan. One person from China Merchants Securities Co was banned from participating in the securities market for life, while another suspected of insider trading was transferred to judicial authorities for further investigation.

The move represents the unwavering effort of the CSRC in strengthening market regulation under its new head, Dong Shaopeng, a senior research fellow from the Chongyang Institute for Financial Studies at the Renmin University, told the Global Times on Friday.

Cracking down on illegal arbitrage activities is beneficial for boosting market confidence and is positive in enabling market stability, Dong said.

"It is hoped this new regulatory trend can continue to thrive and develop," Dong said.

The CSRC said it will continue to strengthen its supervision and develop a special plan to target illegal stock trading activities by securities practitioners, aiming to address loopholes in the regulatory system.

"Swift and decisive action will be taken against any violations that dared to rear their heads," it said.

The CSRC on Friday also announced the first list of key money market fund (MMF) making up of 13 fund products, in a bid to strengthen MMF regulation together with the People's Bank of China, or the central bank.

The CSRC said it will enhance the risk prevention and risk control capabilities of key MMF, and strengthen risk monitoring and daily supervision to effectively protect the legitimate rights and interests of fund shareholders.

"Strengthening targeted supervision for large-scale funds is conductive in preventing illegal arbitrage. It also helps to gain in-depth, standardized understanding of the market information regarding MMF, and promotes fairness and transparency of the market," Dong said.

Following what has been a whirlwind week in the Chinese stock market, marked by swift efforts to tackle volatility, China on Wednesday appointed Wu Qing as a new chief of the country's top securities regulatory agency.

Chinese equities ended up higher on Thursday, the last trading day of the Year of the Rabbit, marking the third consecutive day that the market stretched a rally after short-term volatilities.