There are three major problems, the China Securities Regulatory Commission will order Everbright Securities to take corrective measures

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Reporter| Sun Yizhen

Five securities firms were “named” by the China Securities Regulatory Commission due to business violations by overseas subsidiaries.

According to the website of the China Securities Regulatory Commission on June 10, the China Securities Regulatory Commission took corrective measures against CITIC Securities, Everbright Securities, Cinda Securities, and Haitong Securities, and issued a warning letter to CICC. Take regulatory talks.

The five securities firms “named” this time are involved in the following violations: illegally setting up overseas subsidiaries, failing to complete the adjustment of the equity structure of overseas subsidiaries on time, engaging in non-financial-related businesses by overseas subsidiaries, and illegally setting up overseas subsidiaries and affiliated institutions. The establishment of the record is not fulfilled in accordance with the regulations and other issues.

The decision letter shows that CITIC Securities has three violations. First, it established CITIC Securities Overseas Investment Co., Ltd. in 2015, but failed to report to the China Securities Regulatory Commission for approval in accordance with the regulations at that time; Issues such as the establishment of a holding platform, the establishment of specialized subsidiaries under specialized subsidiaries, the establishment of subsidiaries under special purpose entities (SPVs), and the 8-level equity structure; third, there are overseas subsidiaries engaged in non-financial-related businesses such as real estate fund management and the return subsidiary engaged in consulting, research and other business issues.

According to the website of the China Securities Regulatory Commission, Haitong Securities was ordered to rectify this time because of a series of irregularities by its overseas subsidiaries, Haitong Hengxin Financial Group Co., Ltd. (hereinafter referred to as Hengxin Financial Group), Haitong Kaiyuan International Investment Co., Ltd. and Haitong International Holdings Co., Ltd. .

The decision shows that the establishment of at least 12 institutions under Hengxin Financial Group failed to perform or complete the filing procedures as required; the commercial factoring business that Haitong Hengxin International Financial Leasing Co., Ltd. The business scope of “ financial leasing ” is inconsistent with the requirements of the “Administrative Measures for the Overseas Establishment, Acquisition, and Shareholding of Operating Institutions of Securities Companies and Securities Investment Fund Management Companies” (hereinafter referred to as the “Overseas Measures”); the third is to sort out the equity structure of overseas operating institutions In addition, the formulation of the rectification plan was not serious, and there were major errors and omissions. For example, the relevant level adjustment plan of Hengxin Financial Group was not reported until August 2021 , and the indirect participation of Hengxin Financial Group in Weitian Express was added in September 2021 .

In addition, the domestic projects invested by Haitong Kaiyuan International Investment Co., Ltd. with its own funds (including direct or indirect investment) have not been cleared up; the articles of association of Haitong International Holdings Co., Ltd. The provisions of the Overseas Measures have been revised.

The main reasons for CICC’s dismissal of the warning letter this time are that its subsidiaries are engaged in CICC’s own real estate investment and development projects, and the SPV has not been cleared or completed within the specified time limit.

The full name of SPV is Special Purpose Vehicle. In the securities industry, SPV refers to a special purpose vehicle, also known as a special purpose vehicle or company; its main function is to purchase and package securitized assets and Based on this, asset-based securities are issued to raise funds from foreign investors.

According to the announcement of the China Securities Regulatory Commission, Tianjin Jiacheng Investment Management Co., Ltd., a subsidiary of CICC, is engaged in real estate investment and development projects for the company’s own use; 46 redundant special purpose entities (SPVs) have not been cleared within the specified time limit, and 22 SPVs have not been completed. Completed the level-up within the prescribed time limit; thirdly, the articles of association of overseas subsidiaries were not revised in accordance with the provisions of the “Overseas Measures”.

Everbright Securities was ordered to rectify for not completing the liquidation of illegal businesses and equity.

Specifically, the immigration services provided by China Sunshine Fuzun Immigration Service Co., Ltd., an overseas subsidiary of Everbright Securities, are not within the scope of financial-related businesses, and the existing business has not been cleared; Group Co., Ltd. and Qiqihar Guohong Investment Center (Limited Partnership) equity (partnership share) liquidation; in addition, Everbright Securities failed to complete the cancellation of at least 1 subsidiary, 1 special purpose vehicle (SPV), and 11 subsidiaries on schedule , The level adjustment of 3 SPVs failed to effectively reduce the level structure of overseas subsidiaries.

Cinda Securities was also ordered to take corrective measures. The China Securities Regulatory Commission pointed out that Cinda Securities has major deficiencies in its compliance management and internal control. In addition, the CSRC decision specifically mentioned that the “Overseas Measures” gave Cinda Securities a 3 -year rectification time limit, but the rectification work of Cinda Securities Co. , Ltd. is progressing slowly and the rectification enthusiasm is not enough; and execution is more arbitrary.

Specifically, Cinda Securities has not completed the establishment of the Hong Kong holding platform, and the return company CCB International Trade (Xiamen) Private Equity Fund Management Co., Ltd. has not completed the liquidation, and has not modified the articles of association of overseas subsidiaries in accordance with the “Overseas Measures”.