On July 6, the Office of the Central Committee of the People’s Republic of China and the State Council jointly issued the "Opinions on Strictly Cracking Down on Securities Illegal Activities According to Law", making arrangements for speeding up the improvement of the securities law enforcement judicial system and increasing the punishment of illegal cases, in order to severely crack down on securities in accordance with the law. Illegal activities point the way-
"Zero tolerance" to crack down on securities crimes
Yang Bo Cui Xiaoli
The era of strict supervision of China's capital market has arrived.
On July 6, the "Opinions on Strictly Cracking Down on Illegal Securities Activities in accordance with the Law" (hereinafter referred to as the "Opinions") was released. This is the first time in the history of China's capital market that the Central Office and the State Council jointly issued a joint issue of combating illegal activities in securities. Special documents, the high level of documents, are considered to be the action plan for strengthening and improving securities supervision and law enforcement in an all-round way at present and in the future.
In the "Opinions", improve the legal responsibility system for illegal and criminal activities in the capital market, establish and improve the judicial responsibility system and mechanism for strictly cracking down on securities illegal activities in accordance with the law, strengthen the punishment of major securities illegal and criminal cases and law enforcement in key areas... The attitude of "zero tolerance" for crime and the determination to protect investors.
As an important part of the construction of the rule of law in China's capital market, what is the significance of the promulgation of the "Opinions"?
What are the characteristics of the current crackdown on securities crimes?
What expectations and requirements does the "Opinions" impose on procuratorial work?
With these questions, the reporter launched an interview.
Severe crackdown is a real need
Insider trading is one of the common securities crimes.
In a typical case announced by the Supreme Inspection not long ago, Wang, the general manager of a fund company, recommended the ultrasonic pulping technology of China to a listed company Qing, and specifically participated in Qing's acquisition of the ultrasonic pulping technology and The whole process of non-public issuance of stocks.
Subsequently, during the above-mentioned sensitive period of insider information, Wang contacted and contacted his friend Shang, his younger sister Wang Mouyu, brother-in-law Chen, and his comrade-in-arms Wang Mouyi.
The above-mentioned personnel and Wang Mouyi’s wife Wang Mouhong bought a total of 10.19 million shares of the company during this period, with a transaction value of more than 29.36 million yuan, and announced the acquisition of ultrasonic pulping before the suspension of trading of a company due to major issues. After the technical and non-public issuance of stock information announced the resumption of trading, the company sold all the shares of the Qing company, and the total illegal profit was more than 12.29 million yuan.
The Procuratorate of Quanzhou City, Fujian Province respectively prosecuted Wang Mouyi and Wang Mouhong for insider trading crimes, Shang and Chen for insider trading crimes, Wang for leaking insider information, and Wang Moyu for insider trading crimes.
On November 13, 2017, the Quanzhou Intermediate Court sentenced Wang to six years and six months in prison for leaking inside information and fined 12.35 million yuan; Wang and others were sentenced to six months in prison for insider trading crimes. Up to six years, fines range from fines, and illegal gains will be recovered.
On December 28, 2018, the Fujian Higher Court upheld the original judgment in the second instance, and the judgment took effect.
This is only one of many securities crime cases prosecuted by procuratorial organs in recent years.
Statistics show that since 2016, prosecutors across the country have prosecuted a total of 569 securities and futures crimes.
Among them, from January to May this year, 56 people were prosecuted, a year-on-year increase of 33.33%.
"Illegal crimes such as insider trading and manipulation of the securities market not only damage the interests of small and medium investors, but also cause abnormal stock price fluctuations, disrupt the entire capital market, and affect the direct financing function of the capital market." Shanghai Municipal Procuratorate First Branch Prosecutor Official Zhu Yifeng told reporters that only by intensifying the crackdown on securities crimes can the normal, orderly and healthy development of the capital market be maintained.
"The release of the "Opinions" is exactly what the current Chinese capital market is eagerly looking forward to."
"In fact, the Criminal Law Amendment (11) that was formally implemented in March this year has greatly increased the free penalty and fines for fraudulent issuance and information disclosure and falsification. The determination of'zero tolerance'." Liu Jing, deputy director of the Seventh Prosecution Department of the Third Branch of the Beijing Municipal Procuratorate, said that the promulgation of the "Opinions" fully reflects the great importance of the Party Central Committee and the State Council on the construction of the rule of law in the capital market.
“In recent years, the key institutional innovation of the capital market led by the reform of the registration system has continuously made breakthroughs, effectively stimulating market vitality, significantly optimizing the financial environment for the development of the real economy, and the reform has achieved remarkable results. The capital market has contributed to the promotion of technology, capital and the real economy. High-level circulation has a pivotal role and has become an important part of accelerating the construction of a new development pattern. For this reason, it is pointed out in the "14th Five-Year Plan" that the proportion of direct financing should be increased." The person in charge of the Fourth Prosecutors Office of the Supreme People’s Procuratorate told reporters, however, some Financial fraud, insider trading, market manipulation, and other illegal and criminal activities have severely disrupted the order of the capital market, harmed the interests of investors, and endangered the reform and development of the capital market. Severe crackdowns must be given in accordance with the law to truly ensure the effective play of the role of the hub.
Full chain punishment will become the norm
In recent years, financial fraud cases in the capital market have attracted great attention from the central government and all sectors of society.
Several interviewed prosecutors mentioned that for financial fraud in the capital market, it is necessary to punish and punish the companies and enterprises that specifically implement the fraud, as well as to punish the organization, the controlling shareholder and the actual controller who instigated the fraud, and at the same time. Punish the intermediary organizations that help fraud, and prosecute the entire chain strictly in accordance with the law.
The relevant provisions in the "Opinions" responded to this.
The "Opinions" clearly pointed out that the supervision of intermediary agencies should be strengthened. If there are securities violations, the agencies and their practitioners will be seriously held accountable in accordance with the law, and severe penalties will be imposed on illegal activities such as participating in and assisting in financial fraud.
In the fraudulent bond issuance case of Zhongmoutong Machinery Manufacturing Co., Ltd., Lu Mouwang and others, the Shanghai procuratorial agency conducted investigations into Zhongmoutong Company, Lu Mouwang, Lu Mouxuan, and Lu Mouguang for suspected fraudulent bond issuance. It also simultaneously reviewed whether relevant intermediary agencies provided false certification documents, issued major inaccuracy of certification documents, and accepted bribes by non-state personnel. In the end, the relevant entities were investigated for legal responsibility in accordance with the law, and several intermediaries were sentenced.
After the case was closed, the Shanghai Procuratorate launched further work.
In April 2020, the Shanghai Municipal Procuratorate, in conjunction with the handling of this case and other similar cases, issued a procuratorial proposal to the Chinese Institute of Certified Public Accountants through the Supreme People’s Procuratorate to strengthen the supervision of the accountant industry.
Subsequently, the Chinese Institute of Certified Public Accountants actively took measures to enhance the education of the importance of the responsibilities of intermediary agencies, improve the professional standard system of certified public accountants, strengthen legal knowledge training and professional ethics education, study and improve relevant standards for the quality management of accounting firms, and give better play to industry self-regulation. effect.
"Securities companies, accounting firms, law firms and other intermediary agencies in the capital market are the'gatekeepers' who ensure the effective implementation of information disclosure and investor protection systems. Failure of intermediary agencies to perform their duties in accordance with the law will seriously affect the health of the capital market. Operation." The person in charge of the Supreme Procuratorate's Fourth Prosecutors Office pointed out that the whole chain of punishment of securities crimes will become the norm in the future.
The case was also listed as a typical case by the highest prosecution.
The reporter noted that the Criminal Law Amendment (11) has also greatly increased the punishment for the crime of providing false certification documents by intermediaries. For the provision of false asset evaluation, accounting, auditing, legal services, sponsorship and other certification documents related to securities issuance, If the circumstances are particularly serious, the maximum sentence will be increased from five years to ten years.
Severe punishment of crime is inseparable from professional construction
Regarding the characteristics of securities crime cases, specialization and concealment are common issues discussed by prosecutors.
In recent years, securities crimes have shown some new characteristics and trends, including the emergence of new types of cases, the first cases are frequent; the chain of crimes is lengthened, the proportion of joint crimes is increasing; the anti-investigation capabilities of criminals are constantly "upgrading", insider trading, and undisclosed use In information transaction cases, information is transmitted, the recipient forms an offensive and defensive alliance, and the phenomenon of "zero confession" is prominent.
"The magic is one foot high" and "the road is one foot high".
The professionalization of securities and futures inspections is imminent.
The "Opinions" related to the improvement of the procuratorial system and mechanism for securities cases. Based on the number of cases and staffing, research on the establishment of financial crime case handling teams within procuratorial agencies, as well as public security agencies and procuratorial agencies in some prefectures and cities where securities and futures exchanges are located. 1. The content of the establishment of securities crime handling and trial bases by judicial organs has attracted attention from all walks of life.
The head of the Fourth Prosecutor’s Office of the Supreme People’s Procuratorate pointed out that, “Compared with other financial crimes, although the overall number of securities and futures crimes is small, they have great social impact, and they are highly professional and difficult to handle. If the handling agencies are too scattered, It is not conducive to accumulating experience in case handling and improving the level of professional case handling. Therefore, the Supreme Procurator attaches great importance to the construction of specialization.” In December 2018, the Supreme Prosecutor was established in Beijing, Shanghai, Tianjin, Chongqing, Liaoning, Shenzhen, and Qingdao. The base for handling securities and futures crimes of procuratorial organs.
Accumulate actual combat experience with relatively concentrated case handling, and play an exemplary, leading and radiating leading role in case handling, countermeasure research, policy formulation, and publicity and education on the rule of law.
"The "Opinions" fully reflect the requirements of professionalism. The Supreme People's Procuratorate attaches great importance to the deployment of procuratorial work within the CSRC. This is also the focus of our next work." The person in charge of the Fourth Prosecutors Office of the Supreme People's Procuratorate said.
In addition to strengthening the construction of specialized institutions, specialization also calls for the cultivation of compound talents, and the case-handling bases are also taking active actions.
In accordance with the guiding ideology of "specialized research + specialized management", Shanghai procuratorial organs broke through inter-academic restrictions and administrative models, brought together the city's procuratorial elites, and formed a cross-academic and cross-level "Shanghai Securities and Futures Financial Prosecution Professional Case Handling Team."
In the next stage, we will further deepen the construction of professional case handling teams, and support each branch and grassroots courts to set up more refined professional case handling teams based on the number, types, and staffing of securities and futures crime cases.
Through specialized case handling and research in subdivided fields, the interactive exchanges between judicial practice, administrative law enforcement and academic research will be strengthened, and the “brand” effect of the Shanghai Securities and Futures case handling team will be expanded.
In Beijing, when the procuratorial case handling base was established, the prosecutors selected were all professional prosecutors who had previously handled financial cases, and were equipped with prosecutor assistants with solid professionalism and strong research capabilities. One of the assistants was currently a PhD student in securities law. .
After the establishment of the department, the case-handling base has gradually established working platforms with securities regulatory agencies, universities, public security agencies and other units. At the same time, it also uses external brains to conduct a series of professional targeted training, relying on self-study and research, and is gradually establishing securities-related crimes. Case Library.
As the only securities and futures crime case base in South China, the Shenzhen Procuratorate, in order to strengthen its specialized case handling capabilities, while handling cases, it summarizes each case, explores the problems reflected in the case, and deepens the research on similar cases on this basis. Sort out prominent issues such as the application of law, evidence standards, and criminal policies, and carry out theoretical and practical research.
"The best talent training is to use cases for training and exercise in practice." The person in charge of the Fourth Prosecutors Office of the Supreme Procuratorate pointed out that the establishment of the case base is to allow prosecutors to accumulate practical experience.
"At present, we and the China Securities Regulatory Commission are also sending cadres to take interim positions for training, and we can learn from each other and improve together."
Fighting against securities crimes requires the cooperation of various departments
The "Opinions" take the improvement of the judicial system for securities law enforcement with Chinese characteristics as an important goal, put forward a series of requirements for administrative law enforcement and investigation, prosecution, and trial, and further emphasize the professional cooperation between various departments.
In recent years, while strengthening its own professional construction, the Supreme People's Procuratorate has also paid great attention to professional collaboration with relevant units.
In August 2019, the Chief Prosecutor Zhang Jun and the Chairman of the China Securities Regulatory Commission Yi Huiman held a discussion on relevant legal issues, reached a broad consensus, and formulated the "Minutes of the Working Meeting on Strengthening the Construction of the Rule of Law in Capital Markets."
On November 6, 2020, the Supreme People’s Procuratorate and the China Securities Regulatory Commission jointly held a press conference with the theme of "Strictly Cracking Down on Securities Violations and Crimes and Maintaining Financial Market Order", and released 12 typical cases of securities violations and crimes.
Soon after the announcement of the "Opinions", the relevant departments of the Supreme Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the China Securities Regulatory Commission jointly issued the "Minutes of the Meeting on Issues Concerning Strengthening the Handling of Securities and Futures Crimes and the Professional Construction of Trial Bases", requesting public security, Procuratorates, courts, and trial bases optimize the coordination mechanism, concentrate professional advantages, undertake securities and futures crime cases handling and law application research, criminal countermeasures research, business training, preventive publicity and other tasks, and continue to improve the professionalism of securities and futures crime cases化 level.
Hu Chunjian, Director of the Fourth Prosecution Department of the Shanghai Procuratorate, told reporters that Shanghai is the frontier of China’s capital market reform and development. The Shanghai Procuratorate and the Shanghai Securities Regulatory Bureau signed a memorandum of cooperation, including information sharing, cooperation in combating securities and futures crimes, and special research cooperation. And many other long-term cooperation mechanisms.
The First Branch of the Shanghai Municipal Procuratorate, as the Supreme Procuratorate’s case base for securities and futures crimes, signed a cooperative agreement with the nine divisions of the Economic Investigation Corps of the Municipal Public Security Bureau, and conducted information exchanges on new issues in securities crimes from time to time, and sorted out and researched issues related to similar cases. Reached an agreement to promote the unification of judicial handling standards.
"Shenzhen Procuratorate actively builds an information sharing platform, develops an intelligent auxiliary system for financial crime handling, and strengthens communication with the Municipal Public Security Bureau and the Intermediate Court to form a joint force in punishing securities and futures crimes, and improve the quality and efficiency of case handling." Shenzhen Procuratorate Huang Ruiyi, deputy director of the Third Prosecution Department, told reporters that in order to implement the "Opinions", the Shenzhen Procuratorate, Shenzhen Public Security Bureau, Shenzhen Securities Regulatory Bureau, and Shenzhen Private Equity Association plan to organize a theme "Preventing Securities" in the second half of the year. "Illegal crimes" publicity activities are mainly targeted at Shenzhen securities and futures practitioners, as well as the board of directors, board of supervisors, and senior executives of listed companies. They will conduct on-site lectures from different perspectives of preventing securities violations and crimes.
The person in charge of the Fourth Prosecutor’s Office of the Supreme People’s Procuratorate pointed out that the "Opinions" clarified the guiding ideology and working principles for strictly cracking down on illegal securities activities in accordance with the law, and put forward the short-term goals for 2022 and the long-term goals for 2025. The deployment of the system and mechanism for cracking down on illegal securities activities is the basic follow for the procuratorial work of securities and futures crimes in the future. The procuratorial organs will effectively implement them to provide a strong legal guarantee for the healthy development of China's capital market!