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In 2017, following the guiding principles of the 19th National Congress of the CPC, Shenzhen Stock Exchange (“SZSE”) has fully put into practice the spirit of the Central Economic Work Conference and the National Financial Work Conference. Under the unified leadership of CSRC Party Committee, SZSE has focused on reinforcing its front-line supervisory duties, seriously punishing the illegal actions in securities market and effectively improving rigid constraints on compliance, with the effectiveness and deterrence of front-line supervision materially improved and the legitimate rights and interests of investors greatly protected.
In the past year, SZSE has made 103 disciplinary action decisions that involve 439 persons liable of 47 listed companies and 17 persons liable of 7 bond issuers. The involved illegal behaviors cover information disclosure, regulatory operation and securities trading etc. Among others, the most common cases are on information disclosure, accounting for 40% of the total. Moreover, the punishment objects are of wider range. The spectrum spans not only listed companies and their directors, supervisors, senior management, controlling shareholders and de facto controllers, but also restructuring counterparties, bond issuers, intermediary organizations and their practitioners etc.
An SZSE principal that in 2017, SZSE has stressed the important function of disciplinary punishment to correct deviated deeds and faults, prevent risks and protect orderly market operation. The disciplinary actions taken are of the following features. First, severely cracking down serious violations to firmly establish supervisory deterrence. SZSE has denounced 20 listed companies, a substantial increase of 50% from that in 2016. As to the infractions of adverse impact on the market, for example, overdue disclosure of financial reports, material changes in performance forecast reports and fund occupation, SZSE has taken quick actions to seriously hold the subjects accountable and, in particular, imposed the severe punishment of public denouncement on some companies that have made frequent and serious violations. Second, keeping a close watch on the chaos in capital operation to purify market environment. SZSE has constantly intensified supervisory efforts on “hoodwinking” restructuring and actions breaking promises. Seven restructuring-related violation cases, including fake financial reports of subject companies and counterparties’ unfulfillment of performance commitments, were disciplined to clean the market ecology. Third, severe punishment on illegal stock trading to ensure stable market operation. The persons liable in 26 illegal securities trading cases were punished, which has effectively regulated the stock trading behaviors of listed companies’ interested shareholders, directors, supervisors and senior management to maintain the market trading order. Fourth, full employment of punishment methods to prevent the risks and resolve the lurking perils in bond market. Actions such as the irregular use of raised funds and overdue disclosure of major events were seriously treated, which has effectively protected the legitimate rights and interests of bond holders. Fifth, reinforcing intermediary organizations’ due diligence to improve their conscientiousness of positions. One accounting firm was publicly denounced and 28 practitioners of intermediary organizations were punished, with the total punished people being the sum of those in the past three years. By intensifying the supervision, SZSE has urged intermediary institutions to truly play the role as an inspector and guard.
In 2018, with the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, SZSE will remained committed to CSRC’s comprehensive and strict law-based supervision philosophy and strengthened the front-line supervision requirements on exchanges. Seizing the opportunity of facilitating the implementation of the newly amended Measures for the Administration Securities Exchanges, SZSE will enrich and complete the categories of disciplinary actions, optimize the work procedures and improve the pertinence, transparency and credibility of the work, thus bringing SZSE’s various supervisory work to a new level and practically provide a cleaner orderly multi-tiered capital market for the quality development of the real economy.
