Another brokerage may face suspension of sponsorship.
On April 12, Huaxi Securities said that it had recently received a prior notice of administrative regulatory measures that the Jiangsu Securities Regulatory Bureau planned to suspend the company's qualification for sponsor business for six months.
The penalty of Huaxi Securities is related to the fixed increase project of Jin Tongling (safeguarding rights). The company was announced by the Jiangsu Securities Regulatory Bureau at the beginning of this year that its financial fraud lasted for six years.
In the view of Jiangsu Securities Regulatory Bureau, Huaxi Securities is suspected of failing to perform its duties diligently and continuously supervising the on-site inspection work in the above-mentioned fixed increase projects.
In response, Huaxi Securities said that the company will learn lessons, seriously reflect, strengthen management, improve and improve the internal control mechanism of investment banking business, and continue to improve the quality of investment banking business.
Will be suspended from sponsorship for half a year
On April 12, Huaxi Securities announced the administrative supervision measures of Jiangsu Securities Regulatory Bureau in advance, and the local bureau planned to suspend the qualification of sponsor business for six months.
Jiangsu Securities Regulatory Bureau said that Huaxi Securities is suspected of a number of violations in the practice of Jin Tongling's non-public stock offering sponsor program in 2019. First, due diligence is suspected of not being diligent and responsible. There are false records of issuing stock listing recommendations to specific targets.Daiwasol32500Second, the relevant reports issued during the continuous supervision phase are suspected of having false records; third, the on-site inspection work of continuous supervision is suspected of not being carried out in place.
The relevant insurance generation cannot absolve itself of the blame. The Jiangsu Securities Regulatory Bureau also plans to take regulatory measures against Liu Jingfang and Zhang ran, the sponsor representatives of the project, as inappropriate candidates, and shall not hold relevant positions or actually perform the above-mentioned duties within two years from the date of the decision on regulatory measures; it has decided to take supervision and management measures of issuing warning letters to Zheng Yi and Chen Qingling, the sponsor representatives of the project.
It is reported that in January this year, Jiangsu Securities Regulatory Bureau announced Jin Tongling's 6-year financial fraud road. From 2017 to 2022, Jin Tongling and its wholly owned subsidiaries adjusted the completion progress (implementation progress) of the EPC general contract project by forging project image progress confirmation forms and invoice, falsely increasing or reducing the total operating income and profits of 12 companies, including Daming County Grass Root New Energy Thermal Power Co., Ltd., Kaisai (Taiyuan) Biomaterials Co., Ltd. Jin Tongling and its holding subsidiaries falsely increase business income and total profits by recognizing income in advance without delivery and not deducting income from sales.
According to the data, the total amount of Jin Tongling's falsely increased or reduced profits from 2017 to 2022 accounted for 103 of the company's total disclosed profits (absolute value) respectively.Daiwasol32500.06%, 133.10%, 31.35%, 101.55%, 5774.38%, 11.83%, resulting in false records in the company's corresponding annual report.
During this period, Jin Tongling plans to issue a fixed increase in 2019, and Huaxi Securities serves as the sponsor of the project. Due to lack of diligence, brokerages are now in a whirlpool.
Huaxi Securities: serious accountability and sound mechanism
With regard to the advance notice of administrative supervision measures issued by the Jiangsu Securities Regulatory Bureau, Huaxi Securities said that the company will deeply learn lessons, seriously reflect, strengthen management, improve and improve the internal control mechanism of investment banking business, and continue to improve the quality of investment banking business.
The company said that it will thoroughly implement the requirements of strict access to issuance and listing, improving the quality of listed companies, and building a first-class investment bank, earnestly fulfill the responsibility of the "gatekeeper" of the capital market, and constantly improve its ability to serve the real economy.
It is understood that at the beginning of 2023, the China Securities Regulatory Commission organized a special on-site inspection of investment banking business internal control and clean practice of Huaxi Securities.
Huaxi Securities said that since the special on-site inspection, the company has faced squarely the problems of inspection feedback, combed investment banking projects, set up bank reform, and strictly grasped the rectification and reform work, mainly including:
First, we should be seriously accountable and be held accountable. The relevant personnel, related business, quality control and core departments have been held accountable, and the internal accountability system has been improved to further increase accountability.
The second is to improve the position and strengthen the consciousness. The company has repeatedly organized personnel at all levels to carry out thematic learning and training to enhance risk awareness and professional ability.
The third is to improve the division of labor and the mechanism. Establish an organizational management system that meets regulatory requirements and meet the needs of market competition and business development, and continuously improve all aspects of business processes and systems.
The fourth is to optimize the team and improve the ability. Pay more attention to the professional quality and management concept of the contingent of cadres, adjust the heads of relevant business, quality control and core departments, remove a number of business personnel whose professional abilities are not up to standard, and consolidate the manpower foundation of quality control.
There is uncertainty about the impact on this year's operation.
If the above penalty falls, what impact it will have on the performance of Huaxi Securities this year will be concerned by the market.
Huaxi Securities said that according to preliminary statistics, Huaxi Securities's business income related to the qualification of sponsor business in 2023 is about 35 million yuan, and the accurate data is based on the company's annual report announced later. There is uncertainty about the impact of the incident on the company's operations in 2024 and beyond.
Investment banking has not contributed much to Huaxi Securities's revenue in the past three years, ranking third or fourth in the traditional business sector, according to brokerage Chinese journalists.
According to the annual report, Huaxi Securities investment banking earned 457 million yuan in 2021, accounting for 8.92 percent of the total revenue, while investment banking revenue in 2022 was 218 million yuan, contributing 6.47 percent to that year's revenue.
If the above penalty is finally landed, it is expected to have an adverse impact on Huaxi Securities investment banking business. But looking at the whole industry, from the perspective of IPO this year, the industry-wide investment banking business is facing "contraction".
On April 12, "New Nine articles" clearly put forward "strict control of issuance and listing to be allowed to enter the customs", setting the main theme of the IPO market. On the audit side, the Shanghai and Shenzhen exchanges had "zero acceptance" of IPO in the first quarter of this year, while the North Exchange had two orders in the same period. In the approval end, only 28 IPO companies received registration approval in the first quarter of this year, a decrease of more than 60% compared with the same period last year. If the annual IPO release is extrapolated at the above pace, it is estimated that only 104 IPO may be approved for the whole year. This is undoubtedly a great impact on the investment banking business of the securities industry.
Under the background of the "cold winter" of equity financing, Huaxi Securities Investment Bank how to strengthen the basic skills, consolidate the internal control mechanism, and how to adjust the business structure is worth tracking continuously.
Responsible editor: tactical constancy