China punishes irresponsible securities brokerage firm

Xinhua | Updated: 2017-06-12 09:24

BEIJING - China's securities regulator has punished the Chongqing-based Southwest Securities for not exercising due diligence on the reorganization of two companies.

Southwest Securities served as the independent financial adviser for the reorganization of Shenzhen-listed Anshan Heavy Duty Mining Machinery Co with Nine Top Group, an office service company based in East China's Zhejiang province.

The brokerage firm did not sign a delegation agreement with the Anshan company as required by regulations, and failed to fulfill its responsibility of "full, extensive and reasonable investigation" into Nine Top Group, the China Securities Regulatory Commission (CSRC) said in a statement.

Southwest Securities did not discover the facts that Nine Top inflated its service charge income and trade income from 2013 to 2015 and that it factitiously raised its bank deposits by 300 million yuan ($44 million), the statement said.

The independent financial advisory report provided by Southwest Securities in April 2016 thus included false content and major omission.

CSRC decided to confiscate the brokerage's 1-million-yuan income from the case and impose a fine of 5 million yuan. Two staff members in charge of the business also received penalties.

In past few days, the commission also dealt with three violations of information disclosure rules and another case of stock sales within restricted period, the statement said.

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