CSRC fines Industrial Securities
Regulator says underwriter failed duty to examine Xintai’s books sufficiently
China’s securities regulator on Friday issued an administrative penalty and levied heavy fines against mid-sized brokerage Industrial Securities Co, for negligence of its duties in relation to its client Dandong Xintai Electric Co, the first company to be delisted because of IPO fraud.
Shenzhen-listed Xintai is in the process of delisting for fabricating financial information, including in its application for its initial public offering.
Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission, said Industrial Securities, the IPO underwriter of Xintai, did not examine the information about the flotation sufficiently.
Based on the Securities Law and related regulations, Industrial Securities’ sponsorship revenue of 12 million yuan ($1.8 million) and underwriting revenue of 20.8 million yuan will be confiscated and it will be fined 24.6 million yuan.
Sponsor representatives Lan Xiang and Wu Wenxiang from Industrial Securities would be fined 300,000 yuan each, and they would be banned for 10 years each from the securities industry.
The securities regulator announced on July 8 that Xintai had been fined 8.32 million yuan and its chairman Wen Deyi was fined 8.92 million yuan. Wen Deyi and the company’s accountant Liu Mingsheng were banned for life from the securities industry.
The CSRC also said Xintai would suffer a compulsory delisting, making it the first company to be delisted for IPO fraud.
Xintai dropped by the daily limit for 13 days from July 12, the day it resumed trading.
“It’s a piece of good news for the capital market that the regulator is implementing the delisting measures strictly based on laws and regulations,” said Liu Jipeng, dean of the capital finance institute at the China University of Political Science and Law.
Chinese stocks have headed for their biggest monthly advance since March as concern about a weaker yuan faded and data added to evidence of a stabilizing economy.
The Shanghai Composite Index has climbed 1.7 percent in July in a second month of gains, with consumer companies leading. The gauge fell 0.5 percent at Friday’s close, paced by materials producers. The Shenzhen Component Index dropped 0.64 percent on Friday.