Mainly focusing on these issues, the "double random" penalty continues! 14 people from 3 securities firms were fined securities within a week | System | Securities firms

Recently, Jiangxi Securities Regulatory Bureau, Tianjin Securities Regulatory Bureau, and others have disclosed that they have reported violations of research and reporting business by research institutes such as Guosheng Securities and Bohai Securities, and issued fines. Earlier, Western Securities and 9 related personnel were also fined for their research and reporting business.

According to a journalist from a securities firm in China, problems such as incomplete business systems, imprecise research report data, insufficient research report argumentation basis, insufficient quality or internal control, and personnel management are serious violations in the "disaster zone".

Recently, in order to strengthen industry warning education and consolidate the achievements of last year's on-site inspection special work, the China Securities Industry Association conducted research and reporting business training.

Three securities firms were fined for research and reporting business within seven days

During the regulatory crackdown, the punishment from the securities research institute is still ongoing.

On June 30th, Jiangxi Securities Regulatory Bureau announced that it will issue a warning letter to Guosheng Securities. The Jiangxi Securities Regulatory Bureau has found that there are two major problems in the research and reporting business of Guosheng Securities:

Firstly, there are deficiencies in business management, such as an imperfect system for inviting external experts and a lack of requirements for social reputation and punishment records; Failure to timely revise the relevant systems for pricing reports; The responsibility for grammar errors and typos in securities research reports is not reasonable; The effectiveness of the prudential assessment of the market impact on "Daily Map" is insufficient.

The second issue is that some securities research reports have incomplete data drafts, some data are inconsistent with the source data, there are errors in the unit, and some research reports have situations such as conducting research before approval.

The Jiangxi Securities Regulatory Bureau requires Guosheng Securities to carefully identify and rectify problems, improve the relevant institutional mechanisms for publishing securities research reports, further strengthen internal control, and effectively and comprehensively enhance compliance management level.

Just the day before, Bohai Securities also received a fine. According to the announcement of Tianjin Securities Regulatory Bureau, Bohai Securities also has two problems. Firstly, the company's system for publishing securities research reports is not perfect; The second issue is that the quality control audit of the company's research report is not strictly controlled.

The Tianjin Securities Regulatory Bureau stated that Bohai Securities should further improve the relevant institutional mechanisms for the production and publication of research reports, strengthen the quality control review of research reports, and conduct internal accountability based on the problems found during inspections.

On June 25th, Western Securities was issued a warning letter by the Shaanxi Securities Regulatory Bureau. It is reported that the company has two types of problems:

Firstly, the internal control mechanism for issuing securities research reports is not sound, and some investigations have not followed the pre approval procedures. Sales personnel have participated in the analyst assessment of research reports, and compliance management has not covered the main business links of expert consulting services; The quality control review of research reports is not strict enough, and some research reports have unreasonable valuation forecasts and careless conclusions.

The second issue is that the internal control mechanism for employee appointment and performance evaluation, investment and part-time behavior management, registration and use of self media accounts, and management are not sound and in place. There are cases where investment managers who have been employed for less than 6 months are engaged in investment related businesses, executives and branch heads work part-time in for-profit institutions, hold equity investment management company equity, securities analysts register and use self media accounts to publish research opinions, and fail to timely report the appointment and dismissal of executives and the integrity information of practitioners.

14 personnel involved in it

Among the three fines mentioned above, the relevant personnel were not spared and were also issued a warning letter by the local securities regulatory bureau. Among them are leaders of research institutes, and sometimes even executives. From the perspective of common issues, researchers mainly lack prudence in writing research reports.

The Western Securities involved a large number of personnel, reaching 9 people. According to the announcement of the Shaanxi Securities Regulatory Bureau, Liu Qinghai, Zhao Cong, and Mu Qiguo are responsible for the violations and have therefore been issued a warning letter.

It is reported that the above three individuals were the then Chief Strategy and Human Resources Officer of Western Securities, Head of Human Resources Department, and Head of Research and Development Center.

According to the announcement from the Shaanxi Securities Regulatory Bureau, there are issues with the securities research reports produced by researchers Zhang Yuguang, Pang Xiaojuan, and Cai Mingzi, including incorrect citation of data, imprecise income forecasts, and insufficient evidence for argumentation; The securities research reports produced by researchers Xu Guanghui, Luo Yamei, and Yang Jingmei have problems such as inadequate research methods, lack of reasonable justification for some assumptions, and insufficient basis for some conclusions. A Chinese journalist from a securities firm noticed that four of the six researchers mentioned above have left Western Securities.

In the announcement of Tianjin Securities Regulatory Bureau, Yao Lei also had the problem of careless research report production during his tenure at Bohai Securities.

Guosheng Securities's fine this time involves four relevant personnel. A certain securities research report published under the name of researcher Yang Yewei has individual data inconsistent with the source data and unit errors.

Researcher Wang Yuhan sent the "Daily Picture" he created to customers through a WeChat workgroup on August 30th last year, which had a negative impact. Before the product was released, it was reviewed by the then Chief Strategy Analyst Zhang Junxiao, as well as quality control and compliance personnel. At that time, Ju Xinghai was the Deputy Director of the Research Institute and the Chief Reviewer of the Institute's Compliance and Quality Control.

Implementation of rectification issues in progress

Since May, securities research institutes and related personnel have been punished for violations. In addition to the three aforementioned securities firms, the ones involved also include CITIC Securities, Shenyin Wanguo, Guotai Junan, China Merchants Securities, Pacific Securities, Shanxi Securities, Huaan Securities, Southwest Securities, etc. The intensive research and reporting business fines in the past month were mainly due to last year's "double random" on-site inspections.

According to an exclusive report by a Chinese journalist from a securities firm, in May, the Securities and Fund Institutions Supervision Department of the China Securities Regulatory Commission issued a notice to securities firms on the "double random" on-site inspection of securities research report business. Last year, the special on-site inspection work covered 45 securities firms and 300 research reports. The common issues discovered by regulation include:

1. that the internal control system of some companies is not updated and adjusted in a timely manner in accordance with the requirements of laws and regulations;

2. some of the company's internal control system implementation effectiveness is insufficient;

3. to the lack of prudence in the production of specific research reports, individual employees privately published securities analysis opinions.

In the above-mentioned notice, the supervision department of securities fund institutions of the CSRC and various securities regulatory bureaus will continue to strengthen the supervision and law enforcement of research and reporting business in accordance with the "zero tolerance" regulatory policy, so as to promote the healthy development of industry norms. It is required that all securities companies and relevant practitioners should combine the problems found in this special inspection, check and seriously rectify, and continuously improve the business quality and compliance level.

On June 14th, the China Securities Association issued a notice to various securities companies, stating that in order to implement the work arrangements for the "double random" on-site inspection of securities research report issuance in 2022, consolidate the achievements of special work, strengthen industry warning education, and carry out training on securities research report issuance, securities companies are required to attach great importance to this training work and organize personnel to complete the training by the end of June 2023.

It is reported that the training targets all practitioners in the research and reporting business, including securities analysts, research assistants, quality control and compliance personnel, and research and reporting sales personnel.