Fines for financial fraud are published intensively, and counterfeiters will be ＂empty of people and money＂

　　The administrative punishment of Hua Xun Ark financial fraud case has finally settled. On March 15th, China Securities Regulatory Commission issued the administrative penalty decision and the market ban decision for Hua Xun Ark and related responsible persons.

　　Hua Xun Ark case is one of the series cases of "private network communication". The company’s financial fraud inflated its operating income by 4.3 billion yuan and inflated its profit by 1.1 billion yuan. In May, 2022, Hua Xun Ark was put on file for investigation by China Securities Regulatory Commission. In June of that year, the company was forced to withdraw from the market. The penalty decision shows that the company and the responsible person were fined a total of 19.1 million yuan.

　　Industry insiders told the Securities Daily that the financial fraud case of Hua Xun Ark spanned the old and new securities laws, and the CSRC applied the new securities law to all such cases and brought them into the space of severe punishment, which showed the regulatory authorities’ "long teeth and thorns" supervision.

　　Recently, the CSRC issued a number of fines related to financial fraud and fraudulent issuance, and the investigation efficiency was significantly accelerated, the punishment intensity was significantly improved, and the cost of violating laws and regulations was greatly increased. The maximum penalty amount was nearly 100 million yuan. People close to the regulatory authorities told the "Securities Daily" reporter that securities regulatory enforcement is by no means "three cups of fines", not to mention "breaking money and avoiding disasters", and there are also accountability chains such as civil claims and criminal punishment waiting for offenders. The CSRC has always insisted on giving administrative, civil and criminal all-round three-dimensional blows to vicious illegal acts, so that those who "tell lies", "make false accounts" and "hide the truth" will suffer the end of "both human and financial resources".

　　Punish severely and quickly.

　　The illegal cost of financial fraud has increased significantly.

　　The CSRC has always had "zero tolerance" for financial fraud. Since the end of last year, the CSRC has intensively issued a number of financial fraud and fraudulent issuance tickets applicable to the new securities law, and the punishment has been significantly improved. For example, in the financial fraud case of Hua Xun Ark, the new securities law raised the maximum penalty for financial fraud and other information disclosure violations to 10 million yuan, and the CSRC imposed a heavier fine of 8 million yuan on Hua Xun Ark.

　　In December last year, the CSRC issued a decision on administrative punishment for fraudulent issuance and financial fraud of starting shares. Starting shares used the internal accounting system to fictitious purchase and sale business, and inflated income and profits for three consecutive years from 2018 to 2020, with the highest inflated ratio exceeding 50%. In addition, in 2020, the company fraudulently issued convertible bonds by means of financial fraud, and illegally raised 520 million yuan. The CSRC fined the company and relevant responsible persons a total of 77 million yuan.

　　In January this year, the regulatory agency issued a decision on administrative punishment for () financial fraud and fraudulent issuance. Sichuang Yihui deliberately concealed the traces of fraud, and "borrowed" the subsidiary to carry out false business. In 2021, it fraudulently issued convertible bonds and illegally raised 817 million yuan. The regulatory authorities imposed a cumulative fine of nearly 100 million yuan on the company and responsible personnel.

　　In February of this year, Huatie and Hongxiang successively announced that the company had received administrative punishment and advance notice of market prohibition issued by the regulatory authorities for alleged financial fraud or fraudulent issuance.

　　According to the prior notice, from 2017 to 2022, Hongxiang Co., Ltd. was suspected to have inflated its operating income by about 1 billion yuan and inflated its profits by fictitious sales business, and the company’s shares and convertible bonds issued in 2019 and 2020 were suspected of fraudulent issuance. The regulatory authorities planned to "combine the four crimes" against the company and related responsible persons, with a total fine of 65.56 million yuan.

　　In the annual reports of 2020 and 2021, Huatie Company’s "fraud" was superimposed with "misstatement", false trade was carried out, income and profit were inflated, and capital transactions with related parties were not disclosed for four consecutive years from 2019 to 2022. The regulatory authorities intend to impose a total penalty of 26.3 million yuan on the company and responsible persons.

　　According to industry insiders, judging from the above cases, no matter how hidden the fraud means, the CSRC insists on "penetrating" supervision, pierces the false "veil", pays close attention to people and directly hits the pain; Whether it is a public offering or a non-public offering, once there is a half sentence of "falsehood" to deceive investors, it will be severely punished. Whether issuing stocks or convertible bonds, the issuer "declares that it is responsible", and any counterfeiter who attempts to "circle money" will not only "spit out" the interests with the principal and interest, but also pay a heavy economic price.

　　Accurately attack the "key minority"

　　Let the counterfeiters "go bankrupt and sit at the bottom of the prison"

　　In the case of financial fraud and fraudulent issuance of listed companies, the "key minority" such as the controlling shareholder and actual controller of the company are often the main messengers behind the scenes. For these initiators, the CSRC imposed a huge fine and deprived them of the qualification to continue as executives, which not only made them "bankrupt" but also ruined their careers; Suspected of constituting a crime, or being investigated for criminal responsibility; At the same time, strengthen law enforcement deterrence, cooperate with investors to vigorously recover losses, and let counterfeiters "have both human and financial resources."

　　In the case of Sichuang Medical Benefit, the regulatory authorities fined three responsible persons 13.5 million yuan, with a maximum fine of 7.5 million yuan and a per capita fine of 4.5 million yuan, more than 10 times the per capita annual salary, which made the offenders "bankrupt". Among them, Zhang Mouzhong, the then chairman and general manager of Sichuang Medical Hui, took a 10-year market ban and ruined his career, so that he could no longer make waves and let the offenders "have no way to go". In addition, it meets the criminal prosecution standard of the crime of fraudulent issuance or the crime of illegal disclosure and non-disclosure of important information. Once convicted, the persons involved will face criminal accountability.

　　In the case of starting shares, the CSRC fined four responsible persons a total of 20 million yuan, with a maximum fine of 10 million yuan, 16 times more than the upper limit of the fine in the old law. At that time, Huatie Co., Ltd. was the chairman and actual controller, and it was the "first evil" to organize and instigate and make decisions to implement the case. The regulatory authorities planned to impose a huge fine of up to 8 million yuan on it and take measures to ban it from the market for life.

　　Yang, the actual controller, chairman and general manager of Hongxiang Co., Ltd., intends to be fined as much as 22.88 million yuan and take measures to ban from the market for life. Once the decision is made, the "bad money" will be cleared out of the market permanently.

　　The new securities law not only has a "qualification penalty" to restrict employment, but also adds a "trading authority penalty" to restrict trading, so that offenders will never have the opportunity to set foot in the capital market.

　　According to industry insiders, the CSRC insists on "taking drastic measures to eliminate malnutrition" and "treating chaos with severe punishment", and severely attacks the counterfeiters who try their own laws, "beating their bones and muscles" and "not daring to do it again", so that they can learn a lesson and have a long memory. Using the three-dimensional accountability of "civil punishment" to make counterfeiters "both human and financial" and eradicate the "cancer" of financial fraud.

　　Grasp and rule together.

　　Improve the comprehensive punishment and prevention system of financial fraud

　　According to public data, the CSRC has handled 203 cases of fraud in the past three years and transferred 116 cases of letter cover to public security organs. The reporter learned from people close to the regulators that in the next step, the CSRC will further improve the punishment of financial fraud in the capital market, promote the formulation of opinions on the comprehensive punishment and prevention of financial fraud in the capital market by all localities and departments, strengthen inter-ministerial coordination and coordination between the central and local governments, and promote the formation of a coordinated and organically connected regulatory cooperation pattern.

　　The first is to strengthen penetrating supervision. Further improve the normalized clue discovery and processing mechanism, and continuously screen high-risk and suspicious listed companies through annual report supervision and on-site inspection. Strengthen the collection and combination of information on important parties and related parties of listed companies, improve the level of risk early warning and enhance the ability of discovery. Strengthen data sharing with various departments and local governments.

　　The second is to seriously rectify the areas where fraud is frequent. Severely crack down on long-term systematic fraud and third-party cooperation fraud, and resolutely break the "ecological circle" of fraud. Seriously punish fraudulent issuance of stocks and bonds. Intensify the crackdown on the abuse of accounting policies to implement fraud. Punish listed companies for financial fraud through supply chain finance, commercial factoring and bill trading, "idling" and "taking orders" according to law, and truly supervise "long teeth with thorns" and "Kouga iron teeth".

　　The third is to strengthen prevention beforehand. Strengthen corporate governance supervision such as internal control of enterprises, increase the supervision pressure on key minorities, further give play to the anti-fraud functions of audit committees and independent directors, and increase the reward amount for insider reporting.

　　The fourth is to compact the responsibility of intermediaries. We will resolutely "double-investigate a case" and file a case in parallel, severely punish illegal cases such as collusion and fraud, resolutely apply "hard measures" such as prohibition of business, and urge audit and evaluation institutions to find out and report on their own initiative in time.

　　The fifth is to strengthen all-round three-dimensional accountability. Promote the introduction of regulations on the supervision and management of listed companies, clarify the legal responsibilities for cooperating with acts such as counterfeiting and encroaching on the interests of listed companies, and strengthen administrative constraints. Make full use of the institutional advantages of public security and procuratorial organs stationed in the CSRC, and explore intelligence guidance and joint listing supervision. Promote the judicial interpretation of the crime of breach of trust damaging the interests of listed companies, and increase criminal accountability for financial fraud and embezzlement of the interests of listed companies. Give play to the system functions such as paying in advance, supporting litigation, and the commitment of administrative law enforcement parties, and greatly increase the illegal cost.