Original title: Involving copy-book auditing, pseudo-market value management, negligence of gatekeepers… The China Securities Regulatory Commission re-investigated 16 major typical cases strictly and quickly, and named these violations
Reporter: Liu Chaofeng
Since the Central Office and the State Council jointly issued a document to crack down on illegal securities activities, the special enforcement actions of the China Securities Regulatory Commission have investigated and handled 16 major cases.
Recently, the China Securities Regulatory Commission has deployed special enforcement actions to combat financial fraud, capital appropriation, illegal guarantees, market manipulation, and insider trading, and other serious violations. 16 major typical cases were investigated and dealt with in strict accordance with the law.
Liu Yongqiang, deputy director of the Inspection Bureau of the China Securities Regulatory Commission, will resolutely implement the “zero tolerance” policy, centrally deploy inspection and law enforcement forces, continue to maintain a high-pressure posture against securities fraud, counterfeiting, and “false market value management” and other securities violations, and strengthen law enforcement deterrence. Purify the market ecology and promote the healthy and stable development of the capital market.
The China Securities Regulatory Commission investigated and handled 16 major securities violations
Liu Yongqiang, deputy director of the Inspection Bureau of the China Securities Regulatory Commission, stated at a press conference of the China Securities Regulatory Commission on July 16 that the China Securities Regulatory Commission has recently deployed special enforcement actions to combat financial fraud, capital occupation, illegal guarantees, market manipulation, insider trading and other serious violations. , And re-investigate 16 major typical cases in strict accordance with the law and promptly. At present, the relevant investigation work has been fully launched.
This is to implement the “Opinions on Strictly Cracking Down on Illegal Securities Activities in accordance with the Law” issued by the Central Office and the Office of the State Council, in accordance with the work policy of the State Council’s Financial Commission of “Establishing a System, Non-Intervention, and Zero Tolerance”, combined with current cases of securities illegal activities. Characteristics and illegal situation,
The above-mentioned 16 cases mainly involved:
The first is a case that severely eroded the foundation of market integrity and undermined the seriousness of the information disclosure system. Including the implementation of systematic financial fraud through fictitious inventory and trading business, the abuse of accounting standards and accounting policies to inflate profits, and the use of various methods to whitewash company performance. Individual companies have repeatedly involved in violations of the law, and a small number of directors, supervisors, and senior executives violated their loyalty obligations to the company, organized and planned financial fraud to cover up misappropriation of funds.
The second is a case that seriously infringed on the interests of listed companies and affected the improvement of the quality of listed companies. Including the actual controllers of listed companies, major shareholders, etc., occupying the listed company’s funds for a long time and huge amounts of illegal guarantees, etc., some occupying the listed company’s funds to repay bank loans and redeeming bills, and some privately engraved official seals in the name of the listed company to provide the actual controller in violation of regulations guarantee.
The third is a case that seriously undermines the principle of fair trade and harms the interests of investors. Including the actual controllers and major shareholders of listed companies in the name of market value management, colluding with private equity institutions, traders, allotment intermediaries, etc., to use their capital and shareholding advantages to drive up the company’s stock price; after major shareholders of listed companies learn about the company’s performance loss information Sell stocks in advance to avoid losses; individual listed companies have repeatedly engaged in insider trading when planning major events.
The fourth is a case of serious deviation from professional ethics and loss of the role of “gatekeeper”. Including that the relevant audit institutions of listed companies unilaterally rely on the company to provide information, engage in “accounting” audits, fail to implement adequate audit procedures for fraud risk matters, and even negotiate the types of audit opinions with listed companies in advance.
Major violations of naming
The main violations named by the Securities Regulatory Commission are as follows:
1. The company has repeatedly involved in violations of the law, and a small number of directors, supervisors, and senior executives violated their loyalty obligations to the company, organized and planned financial fraud to cover up misappropriation of funds.
2. The company’s actual controllers, major shareholders, etc. occupy a large amount of funds of the listed company for a long period of time, and violate guarantees.
3. Occupy listed company funds to repay bank loans and redeem bills.
4. Privately engraved official seals in the name of the listed company provide guarantees for actual controller violations.
5. In the name of market value management, the actual controller and major shareholder of the company colluded with private equity institutions, traders, and capital intermediaries to use their capital and shareholding advantages to boost the company’s stock price.
6. After the major shareholders learn about the company’s performance loss information, sell stocks in advance to avoid losses.
7. Listed companies have repeatedly engaged in insider trading when planning major events.
8. The institution engages in “account-copying” audits and fails to implement adequate audit procedures for fraud risk items
The audit institution and the listed company agree on the type of audit opinion in advance.
In response to a Weibo big V’s revelation on the market value management of listed companies in May, the CSRC spokesperson stated on May 14 that the CSRC has always upheld a “zero tolerance” attitude for market manipulation and insider trading in the name of market value management. , To be severely investigated and dealt with in accordance with the law, and those suspected of crimes shall be promptly transferred to the public security organs.
Yi Huiman also emphasized that recently, all parties in the market have paid more attention to illegal behaviors such as market manipulation in the name of market value management. In fact, there is a clear boundary between market value management and market manipulation. The China Securities Regulatory Commission will work with public security agencies to resolutely crack down on illegal activities such as “pseudo-market value management” and effectively purify the market ecology.
Recently, the Supervisory Commission once again spoke out against the illegal acts of listed companies and related parties conspiring to manipulate the market. Chen Jie, deputy director of the Inspection Bureau of the China Securities Regulatory Commission, stated at a press conference of the China Securities Regulatory Commission on July 9 that since 2020, the China Securities Regulatory Commission has verified 15 cases of market manipulation in the name of so-called “market value management”. In the next step, the China Securities Regulatory Commission’s inspection and law enforcement will focus on market manipulation in the name of “market value management”, strengthen the connection and cooperation between administrative law enforcement and criminal justice, strengthen all-round and three-dimensional accountability, increase the cost of violations, and strengthen law enforcement. .
The China Securities Regulatory Commission stated that it will resolutely implement the “zero tolerance” policy, focus on the deployment of inspection and law enforcement forces, innovate the investigation organization model, adhere to the whole chain of crackdowns, insist on all-round accountability, and continue to maintain the management of securities fraud, counterfeiting, and “false market value”. The high-pressure situation of similar securities violations, strengthen law enforcement and deter, purify the market ecology, and promote the healthy and stable development of the capital market. The investigation and handling of relevant cases will be announced in a timely manner.
The Central Office and the State Council jointly issued a document to crack down on illegal securities activities
On July 6, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council publicly released the “Opinions on Strictly Cracking Down on Illegal Securities Activities in accordance with the Law” (hereinafter referred to as the “Opinions”). “Zero tolerance” jointly issued a document, undoubtedly of great significance.
The “Opinions” focus on the goal of creating a standardized, transparent, open and independent capital market, adhere to the direction of marketization and rule of law, and adhere to the policy of “building systems, non-intervention, and zero tolerance”, and clarify that the capital market will crack down on illegal securities activities in the next five years The main goal.
Among the five-year main objectives, the “Opinions” indicate that by 2022, important progress has been made in the construction of the legal liability system for illegal and criminal activities in the capital market. The law enforcement and judicial system and coordination and cooperation mechanisms for severely cracking down on securities illegal activities have been initially established. Costs have increased significantly, the frequent occurrence of major illegal and criminal cases has been effectively curbed, investor rights relief channels have become smoother, and the order of the capital market has improved significantly.
In order to accomplish the above goals, the opinion stipulates a total of 27 specific measures in seven areas, including strengthening the punishment of major securities violations and criminal cases and law enforcement in key areas. Namely: including severely investigating and handling major cases such as fraudulent issuance, false statements, internal transactions, rat warehouses, market manipulation, etc., increasing accountability for issuers’ controlling shareholders, actual controllers, directors, supervisors, and senior executives, and seriously investigating intermediaries and their businesses. The legal responsibility of personnel assisting in counterfeiting, improving the cross-departmental coordination mechanism, resolutely banning illegal securities business institutions, cleaning up illegal securities business, cracking down on illegal securities investment consulting activities, intensifying the monitoring of over-the-counter fund allocation, and cracking down on large-scale and systematic over-the-counter Fund allocation activities, strengthen the connection between the administrative handling of cases involving local trading venues and judicial trials, strengthen the unified enforcement of various illegal acts in the bond market, optimize the bond market supervision and coordination mechanism, accelerate the formulation of private investment fund supervision and management regulations, and increase Crack down on illegal fund-raising and embezzlement of fund assets in the private equity sector.
It is particularly worth mentioning that the proposal of the “Opinions” will set up a coordination work group to combat illegal activities in the capital market at the central level. It is understood that the China Securities Regulatory Commission has, in conjunction with the Central Propaganda Department, Supreme Law, Supreme Procuratorate, Ministry of Public Security, Ministry of Justice, and Ministry of Finance, have reached a consensus on the relevant work system, and the team is preparing to convene the first work. Group meeting.
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