By outdoor-nature-child.com On October 18, the China Securities Regulatory Commission (CSRC) reported on the findings from its special inspections of the internal controls and integrity practices within investment banking operations at various securities firms. Notably, this year’s inspections showed significant improvements in coverage, accountability, and enforcement compared to previous years.
In an interview, a representative from the CSRC elaborated on their ongoing efforts to strengthen oversight of investment banking operations. “We aimed to hold intermediary institutions accountable,” they stated. “This year, we organized on-site inspections focused on the internal controls and integrity practices of selected securities firms. The results indicate that, owing to the stringent regulation in recent years, many firms have significantly improved their internal control systems. These systems, which consist of business departments, quality control, and compliance functions, have been effective overall. Nonetheless, we observed that some securities firms still faced challenges regarding their internal controls, particularly in due diligence for certain projects, including bond underwriting.”
Addressing the issues identified during the inspections, the CSRC has adopted a principle of comprehensive supervision and full accountability. The commission is focusing on holding senior executives and key personnel accountable, taking differentiated measures based on the severity of the violations.
For instance, two firms, Kaiyuan Securities and Zhongyuan Securities, faced administrative penalties, which included a six-month suspension of their bond underwriting activities due to frequent and serious violations. The CSRC mandated these firms to undergo comprehensive rectifications. Similarly, for 11 other companies, the commission implemented regulatory discussions, corrective orders, and warning letters, urging them to address shortcomings in due diligence and internal control processes.
Furthermore, the CSRC is holding 43 responsible individuals accountable with measures like regulatory conversations and warning letters, emphasizing the need for companies to take internal disciplinary actions against those responsible.
The representative concluded, “Moving forward, we will encourage all industry institutions to learn from these cases and reinforce improvements in their operations. Our goal is to enhance regulatory outcomes continually, thereby improving the quality of professional practices in the investment banking sector. We need to uphold the integrity and effectively support the real economy and national strategies.”