On the evening of August 12, China Merchants Securities issued an announcement saying that it had received the "Notice of Filing a Case" from the China Securities Regulatory Commission, because it was carrying out the independent financial advisory business of Shanghai Feile Co., Ltd. (now Zhonganke Co., Ltd.) in 2014. During the period, he failed to perform his duties diligently and was suspected of breaking the law, so he decided to file a case against China Merchants Securities.
On May 21 last year, ST Zhong An announced the final judgment of the securities-related misrepresentation case. China Merchants Securities and Ruihua Certified Public Accountants were jointly and severally liable for Zhong An Ke’s payment obligations within the range of 25% and 15% respectively. This is the first effective judgment in which an intermediary agency bears joint and several liability for damages proportionally.
The brokerage China reporter learned exclusively from people close to China Merchants Securities that China Merchants Securities has now fulfilled its responsibility to pay investors in accordance with the law, and may be the only intermediary agency that has assumed responsibility in this case so far. It has fulfilled its corresponding obligations in eliminating investor losses.
The regulatory agency's investigation into China Merchants Securities this time may indicate that the existing risks of this old case 8 years ago will be completely cleared.
An old case 8 years ago led to an investigation
As early as May 2019, the China Securities Regulatory Commission determined in the announcement on administrative punishment of Zhonganke that Zhonganxiao Technology, as a party involved in major asset restructuring, included the "Banbantong" project in the profit forecast, but when the project occurred After the major changes were difficult to continue to perform, the "Profit Forecast Report" was not re-provided in a timely manner, resulting in a serious inflated assessment value and an inflated operating income of 55.15 million yuan in 2013.
The material asset reorganization documents disclosed by Zhonganke accordingly contain misleading statements and false records.
After the CSRC made such a conclusion, relevant investors began to claim and defend their rights against listed companies and intermediaries for major asset restructuring.
On May 21, 2021, the Shanghai High Court made a final judgment that China Merchants Securities shall be jointly and severally liable for the payment obligations of Zhonganke within 25%, and Ruihua shall be jointly and severally liable within the scope of 15%.
The Shanghai Higher Court pointed out that China Merchants Securities failed to provide evidence to prove that it performed diligently and conscientiously in accordance with the professional requirements of an independent financial advisor, and made mistakes in the process of reviewing the relevant materials related to the "Banbantong" project and issuing professional opinions, resulting in the "Banbantong" project issued by China Merchants Securities. Some of the contents of the Independent Financial Adviser's Report contain misleading statements.
China Merchants Securities shall be jointly and severally liable for the loss of investors caused thereby.
According to the Chinese reporter from a brokerage firm, China Merchants Securities respects the above-mentioned verdict, and has fulfilled its responsibility to pay investors in accordance with the law, and may be the only intermediary agency that has assumed the responsibility so far. The corresponding obligations have been fulfilled in terms of losses.
It is worth noting that when the final judgment of the case came out, China Merchants Securities and Ruihua Exchange were not subject to administrative punishment by the CSRC and were jointly and severally liable for compensation by the court.
Gao Li, a spokesperson for the China Securities Regulatory Commission, also said that this is a judicial decision made by the court according to the facts of the case, and the China Securities Regulatory Commission fully respects it.
However, considering that ST Zhong'an was an old case 8 years ago, China Merchants Securities has also fulfilled its obligation to pay in accordance with the law. Now, China Merchants Securities has once again been investigated by the regulatory agency for this case, which may indicate that this historical risk is about to be completely cleared.
Reform and transformation boost modern investment banks
A person familiar with the matter told a brokerage China reporter that in the past two years, China Merchants Securities’ investment banking business line has also undergone drastic reforms, and the quality of practice and project reserves have improved.
According to reports, China Merchants Securities officially implemented the strategic transformation of investment banking in April 2021, and made deployment arrangements in terms of organizational management, strategic planning, cultural construction, coordinated development and party building leadership. Now the achievements of modern investment bank construction are gradually showing.
On the one hand, through the establishment of the Investment Banking Committee, the drawbacks of "single team fighting alone" will be gradually eliminated, and the integrated management of the upstream and downstream departments of the investment banking business and the all-round business system will be realized.
First, improve the organizational structure of investment banks.
On the basis of the original professional teams in electronics, medicine, finance, etc., completed the localized team layout in Jiangsu, Zhejiang and Lianghu regions, established a new professional team in the field of "double carbon", and built "industry + region + product + group and central enterprise services" It has developed a professional business system and continued to further optimize its business organization in accordance with the principle of survival of the fittest.
The second is to promote the construction of digital investment banks.
Established an investment bank digital team, made online and intelligent improvements to the entire business chain of investment banks, built an industry-leading stock issuance management system, further standardized the contracting process, reduced the approval process of the agreement process by 30%, and improved work quality and efficiency. , the manuscript management system has also received special bonus points for regulatory classification evaluation.
The third is to improve the customer-centric investment banking service model.
We will use the entire company to implement the corporate account manager system, explore a comprehensive, one-stop investment banking service model, and provide service guarantees for the construction of modern investment banks.
On the other hand, China Merchants Securities is also proposing the "Lingyue Plan" in accordance with the strategic direction of "what the country needs, what China Merchants can do" as an innovative practice to implement inclusive finance.
According to reports, China Merchants Securities innovatively promotes "full life cycle service for small and medium-sized science and technology enterprises" as a company's strategic-level project, and multi-departments jointly provide enterprises with a full range of financial services until the company is successfully listed.
With the "Lingyue Plan" as the bridge, the "Three Investment Linkage" as the starting point, and the business collaboration as the platform, the investment banking business will be systematically promoted.
As of the end of June 2022, China Merchants Securities' "Lingyue Plan" has nearly 300 companies in the warehouse, which not only empowers the rapid development of the warehoused companies in an all-round way, but also effectively promotes and drives the development of its investment banking business.
The upstream and downstream research of its industrial chain and the synergy of its branches in the investment banking business have also achieved good results.
Since 2021, the number of projects recommended by China Merchants Securities branches to investment banks has increased by more than 20% year-on-year, and the source of effective new customers of investment banks has been further diversified.
According to China Merchants Securities, the company has always been based on “what the country needs and what China Merchants can do”, and consciously puts investment banking business development in the national strategy.
With the implementation and implementation of a series of measures to build a modern investment bank, China Merchants Securities has focused its investment banking business on "hard technology" companies in the past two years and actively participated in the reform of the capital market science and technology innovation board.
For example, helping a group of high-quality enterprises such as VeriSilicon, Gailun Electronics, and Tuojing Technology to be listed on the Science and Technology Innovation Board; helping a group of carbon neutral related enterprises such as Tianci Materials and Zhuhai Guanyu to raise 12.8 billion yuan in equity; underwriting domestic green and carbon Zhonghe-related bonds and asset-backed securities of nearly 10 billion yuan have contributed positively to the green and low-carbon transformation of the real economy.