Menu
Home
Log in / Register
 
Home arrow Economics arrow Chinese securities companies

Analysis of Sponsor Institution and Representative Credit Regulation by Regulatory Measures

Regulation targets may include the sponsor institution or the sponsor representative. Table 7.3 lists the five sponsor institutions that were regulated. Of these institutions, four of them (80 percent) received a warning letter and one received a warning talk. Table 7.4 lists the 51 sponsor representatives that were regulated. Of these representatives, 41 of them (58.8 percent) received either a warning letter or warning talk.

Analysis of the Market Boards of Breaching Sponsors

Looking at whether the issuers subjected to regulatory investigations were publicly listed, we find that 19 were listed companies and 6 were not listed companies. Of the listed companies, nine belong to the SME board, one belongs to the GEM board, and nine others belong to the main board. Table 7.5 lists specific regulation items for all 25 issuers subjected to regulatory investigation.

Analysis of the Annual Frequency of Punishments against Sponsors

Judging by the implementation frequency (Table 7.6), the regulators' approach to the regulation of the primary market is becoming increasingly more strict and more mature.

TABLE 7.2 A List of Sponsor Credit Regulations by Regulation Measures

A List of Sponsor Credit Regulations by Regulation Measures

TABLE 7.3 Sponsor Institution Credit Regulation List by Regulation Measures

Regulation Targets (Sponsor

Regulation Measures

Institution)

Rejecting the sponsor institution's projects

Fortune Securities Co. Ltd.

for three months

A warning letter

GF Securities Co. Ltd.

Ping An Securities Co. Ltd.

A warning talk

BOC International Limited

Everbright Securities Co. Ltd.

Source: The official website of the China Securities Regulatory Commission. TABLE 7.4 Sponsor Representative Credit Regulation List by Regulation Measures

Regulation Measure

Number of Tegulation Targets (time)

Percentage Regulated

Disqualification of the sponsor representative

4

7.8

Rejecting the sponsor representative's projects for 12 months

4

7.8

Rejecting the sponsor representative's projects for six months

2

3.9

Rejecting the sponsor representative's projects for three months

4

7.8

A warning letter

12

23.5

A talk with the regulator

7

13.7

A warning talk

18

35.3

Total

51

100

Source: The official website of the China Securities Regulatory Commission.

Ten punishments were dealt out in 2004 and two in 2005. Of these, all but one were warning talks, and the other was a talk with the regulators. Since 2006, regulatory measures have been increasingly stringent. The CSRC has dealt out eight punishments against six sponsor representatives and two sponsor institutions. The rejection of their projects for three to six months has become a regulatory measure. In 2007, no punishments were dealt out. Six punishments were given in 2008 and three in 2009. Of the punishments given in 2008, two were rejection of projects for three months and 4 were warning talks. Since the IPO process was re-launched in the second half of 2009, few punishments were dealt out in that year. However,

TABLE 7.5 Sponsor Credit Regulation List by Market Boards

Sponsor Credit Regulation List by Market Boards

TABLE 7.6 Sponsor Credit Regulation List by Years

Year

Number of Regulatory Measures

Specific Regulatory Measure

2004

10

One talk with regulators Nine warning talks

2005

2

Two warning talks

2006

8

Two cases of rejecting projects sponsored by the sponsor representatives for six months

One case of rejecting projects sponsored by the sponsor institution for three months

Five warning talks

2007

0

2008

6

Two cases of rejecting projects sponsored by the sponsor representative for three months

Four warning talks

2009

3

Two cases of disqualification of sponsor representatives

One case of rejecting projects sponsored by the sponsor representative for 12 months

2010

12

Three cases of rejecting projects sponsored by the sponsor representative for 12 months

Five warning letters

Four talks with regulators

2011 (Jan-Nov)

15

Two cases of rejecting projects sponsored by the sponsor representative for three months

Two cases of disqualification of sponsor representatives

Nine warning letters

Two talks with regulators

Total

56

Source: The official website of the China Securities Regulatory Commission.

those few punishments were more rigorous than any in the past. One of them involved rejection of projects for 12 months and the other two were disqualifications of the sponsor representative.

In 2010, the trend toward tougher and more stringent regulatory measures became more prominent. The CSRC dealt out 12 punishments against seven individuals and one institution. On June 4, 2010, alone, the CSRC gave seven punishments against GF Securities and its sponsor representatives, Liu Xuyang and Lian Yan. The reason given was that GF Securities Co. Ltd. and its sponsor representative failed to work conscientiously while conducting due diligence investigation in relation to the IPO of Suzhou Hengjiu Photo-Electronic Science and Technology Co. Ltd. and its listing in the GEM market. They did not check and verify the truthfulness and accuracy of the documents before using them to support the application, leading to serious misstatements in the prospectus as to the patent status disclosed. Their behaviors violated the provisions of article 11 of the Securities Laws of the People's Republic of China (the Securities Law) and article 4 of the Administrative Measures for the Sponsorship Business of the Issuance and Listing of Securities. According to the provisions of the Securities Law and the Administrative Measures for the Sponsorship Business of the Issuance and Listing of Securities, warnings were given to GF Securities Co. Ltd. and its sponsor representatives, Liu Xuyang and Lian Yan. They were also subjected to regulatory measures such as talks with regulators, warning letters, and rejection of projects for 12 months.

For the year 2011 (by November 28), the CSRC had given 15 punishments. Of those regulatory measures, there were no warning talks and only two talks with regulators. There were nine warning letters, two cases of sponsor representative disqualification, and two cases of rejection of projects for three months.

It seems obvious that sponsor regulation is becoming more and more rigorous. Table 7.6 lists for comparison the number of regulatory measures given each year from 2004 to 2011 (by the end of November).

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Mathematics
Political science
Philosophy
Psychology
Religion
Sociology
Travel