The SFC issued 123 fines and 6 fines over 10 million yuan during the year
Our reporter Wu Xiaolu
According to the "Securities Daily" reporter, as of August 4, the China Securities Regulatory Commission had issued 123 administrative penalty decisions during the year, 23 of which involved top-level penalties, mainly focusing on violations of the letter. Judging from the amount of fines, the six fines involved more than 10 million yuan, mainly in insider trading cases, of which the highest fine was 3.625 billion yuan.
Market participants believe that more large fines that apply to the new securities law may gradually appear from the second half of this year, and the securities class action system with Chinese characteristics has been activated, and civil accountability will also be increased. The criminal law amendment (draft) is currently underway. During the consultation process, the administrative, civil, and criminal multi-dimensional accountability will significantly increase the cost of illegal capital market violations.
Credit violations and insider trading are the focus of punishment
Since the beginning of this year, the capital market has repeatedly become the focus of attention at meetings of the Financial Stability and Development Committee of the State Council (referred to as the Financial Committee). In the last two meetings of the Financial Committee, they all mentioned "zero tolerance" for illegal activities in the capital market.
On July 30, when the China Securities Regulatory Commission held a mid-year work meeting, it proposed to implement the "zero tolerance" requirement and severely crack down on illegal and criminal acts in the capital market. Continue to intensify the crackdown on vicious criminal cases such as fraudulent issuance, financial fraud, insider trading, and market manipulation, promote the establishment of a coordination mechanism for cracking down on illegal activities in the capital market, and promote the construction of administrative law enforcement, civil recovery, and criminal punishment that link and support each other Three-dimensional, organic system.
According to statistics from the Securities Regulatory Commission’s website, a reporter from the Securities Daily said that as of August 4, since the beginning of this year, the Securities Regulatory Commission and local securities regulatory bureaus have issued 123 administrative punishment decisions and imposed market bans on 46 people. Among them, there were 48 fines for violations of the letter and 35 fines for insider trading. The violation and insider trading remained the focus, and the total number of fines accounted for nearly 70%.
From the perspective of the degree of punishment, of the 123 tickets mentioned above, 23 are the top punishments. Among them, 22 were violations of the letter, and the listed company or the actual controller was punished at the highest level and received a fine of 600,000 yuan. The other one was an insider trading ticket, and the offender was punished with a maximum penalty of "no one fined five".
From the point of view of the amount of fines, since this year, at least 20 fines for individuals or persons acting in concert have fined more than one million yuan, of which 6 fined more than 10 million yuan, and one fined more than 100 million yuan. Mainly concentrated in insider trading cases.
Among them, the highest penalty amount was an insider trading ticket issued to Wang Moumou and Wang Moumou's father and daughter. The administrative penalty decision of the China Securities Regulatory Commission showed that the two persons made a profit of 906 million yuan from a listed pharmaceutical company in Guangdong, and were not fined three times by the China Securities Regulatory Commission. The total fine was 3.625 billion yuan.
According to the "2019 Securities and Futures Inspection Enforcement Investor Protection Evaluation Report", in 2019, the China Securities Regulatory Commission and local securities regulatory bureaus made a total of 296 administrative penalties, with a fine of 4.183 billion yuan and banned 66 people from entering the market.
Three-dimensional accountability will become a trend
On July 31, the China Securities Regulatory Commission stated that it had recently transferred 10 suspected securities crime cases such as financial fraud of listed companies to the public security organs. Since 2019, the China Securities Regulatory Commission has transferred a total of 24 suspected cases of illegal disclosure and non-disclosure of important information to the public security organs.
In the next step, the China Securities Regulatory Commission will severely crack down on illegal securities and futures activities in accordance with the law, and comprehensively use multiple investigations in one case, administrative penalties, market bans, forced delisting of major violations, criminal accountability, and civil compensation to effectively increase Illegal costs and spare no effort to maintain the steady and healthy development of the capital market.
According to the reporter's analysis, of the 123 tickets mentioned above, only 3 tickets involved illegal borrowing of securities accounts, which were punished in accordance with the provisions of the new Securities Law.
"With the help of scientific and technological means, the efficiency of the inspection and enforcement of the CSRC has been greatly improved in recent years. According to statistics, the investigation cycle of cases has been greatly shortened in the past two years, with an average investigation cycle of 133 days." Chen Bo, partner of DeHeng (Shanghai) Law Firm, said "Securities Daily" reporter said: "The CSRC will produce results in an average of 4 months after filing a case. According to this rule, there may be frequent fines for violations of the new Securities Law in the second half of the year. However, the case will be opened after March 1. Yes, it is also very likely that the old law applies in principle to violations before March 1. Unless the violation continues after March 1."
If a large number of fines subject to the new securities law appears, it is expected that large fines will be "not surprising". "The new Securities Law has greatly increased the penalties for fraudulent issuance, illegal disclosure, and non-disclosure of important information, which has further increased the cost of violations in the capital market. Those who violate laws and regulations will therefore face higher administrative fines and civil civil actions against investors. Compensation." Zhu Yiyi, a lawyer from Guohao Law Firm (Shanghai), told a reporter from the Securities Daily: "It is expected that the new Securities Law will be applied to a batch of letter-disclosure violations that have been filed for investigation after March for suspected misleading statements."
The 36th meeting of the Financial Committee proposed that “class actions” should be initiated in a timely manner in accordance with the law for typical cases with significant social impact. With the official release of the "Regulations on Several Issues Concerning Litigation by Representatives in Securities Disputes" by the Supreme People's Court, and the relevant arrangements and rules issued by the China Securities Regulatory Commission and the China Securities Regulatory Commission for Small and Medium-sized Investors, the class action system with Chinese characteristics has been activated. Market participants expect that there will be cases of class actions applicable to securities with Chinese characteristics during the year.
In terms of increasing criminal liability, the "Amendment to the Criminal Law of the People's Republic of China (11) (Draft)" (referred to as the draft) has been reviewed by the Standing Committee of the National People's Congress and is seeking comments. The draft increases the penalties for the crime of fraudulent issuance of stocks and bonds; the crime of disclosing or not disclosing important information in violation of regulations; and the crime of providing false certification documents; and the crime of issuing certification documents with major inaccuracy. Market participants believe that the amendments to the criminal law and the new securities law echo each other and complement each other, and will strengthen the crackdown on securities violations from multiple dimensions such as administrative, civil, and criminal. (Securities Daily)