Four Securities Firms Were Investigated By The China Securities Regulatory Commission For Failing To Review Customer Identities As Required

Management's efforts to crack down on malicious short selling are increasing. Yesterday evening, four securities firms including Haitong Securities, GF Securities, Huatai Securities, and Founder Securities successively issued announcements stating that they were under investigation by the China Securities Regulatory Commission.

The announcement showed that four securities firms were investigated by the China Securities Regulatory Commission for allegedly failing to review and understand the identities of their customers as required. Wang Zhibin, a lawyer at Shanghai Jiesai Law Firm, said that the securities firms under investigation may have failed to conduct due diligence and verify customer information during the account opening process, leading to the emergence of false accounts. These fake accounts are likely to be used by individual or institutional investors with ulterior motives. They may be related to the recent large fluctuations in stock indexes and also pose significant security risks. A private equity source in Beijing speculated that the brokerage’s investigation may be related to the previous cleanup of illegal OTC capital allocation. It is understood that both Tonghuashun and Hundsun Electronics were investigated by the China Securities Regulatory Commission not long ago and are still in the investigation stage. However, Wang Zhibin believes that the nature of the investigation of the four securities firms is different from that of cleaning up illegal capital allocations. "Illegal capital allocation is a gray area. It is the legal obligation of securities companies to verify account holders. If the relevant securities companies violate it, it is a pure illegal act." Wang Zhibin said.

Regarding the collective investigation of multiple securities companies, an industry insider said that it does not mean that the relevant securities companies have encountered a black swan. "It is still in the investigation stage, and whether there will be a penalty, the decision and the extent of the penalty are still uncertain." Industry insiders said. At the same time, industry insiders said that judging from the current situation, the investigation will not have a great impact on the operating performance of relevant securities companies. The four securities firms also stated in the announcement that during the investigation, the company will fully cooperate with the China Securities Regulatory Commission’s investigation and strictly perform its information disclosure obligations in accordance with regulatory requirements.

In addition to the rare collective investigation by multiple securities firms, according to Xinhua Viewpoint’s official Weibo report, eight people including Xu from CITIC Securities were suspected of illegally engaging in securities trading activities, and Wang and others from Caijing magazine were suspected of fabricating and creating false information about futures trading. Liu, a staff member of the China Securities Regulatory Commission, and Ouyang, a former employee, were suspected of insider trading and forging official seals, and have been asked by the public security organs to assist in handling the case. investigation. It should be noted that in previous actions to protect the market, the "national team" used multiple business departments of CITIC Securities to strongly protect the market. Therefore, CITIC Securities was once considered the main force in maintaining market stability. Therefore, it was revealed yesterday that relevant personnel were suspected of breaking the law, which surprised the market. Regarding the request of Wang from Caijing to assist in the investigation, some insiders believe that false news may have been spread, which has greatly aggravated the volatility of the index and the market. In this regard, the famous economist Song Qinghui believes that this is a manifestation of the regulatory authorities' strict investigation of the escalation of malicious short-selling forces and has achieved certain results. "Recently, the market index has fallen sharply, and the reason behind the limit of 1,000 shares is not only a lack of confidence, but also related to some suspected malicious short-selling behaviors. Only by further regulating the market environment can it be conducive to market development." It is conducive to the smooth operation of the A-share market. "Song Qinghui said. (Ma Yuanyue, Dong Liang)

标签： #Brokerage #Investigation #Filing #Securities Regulatory Commission #Securities