The Jiangsu Securities Regulatory Bureau's supervisory measures against Huaxi Securities have been officially implemented. According to the announcement on the evening of May 5, the company's qualification for sponsorship business has been suspended for six months, spanning from April 28, 2024, to October 27, 2024.
The penalty stems from its involvement in the private placement project of Jintongling in 2019. The Jiangsu Securities Regulatory Bureau pointed out that Huaxi Securities had multiple violations in this project, including insufficient due diligence and false records in the sponsorship documents, which violated relevant regulatory provisions.
The punishment not only targets the company itself but also includes two signatory sponsors who were deemed inappropriate and are prohibited from undertaking duties related to securities issuance and listing sponsorship for the next two years.
Huaxi Securities has expressed deep reflection on this penalty and has pledged to strengthen its internal control mechanisms and improve the quality of its investment banking services. The company stated that it would continue to fulfill its regulatory responsibilities in the capital market and enhance its ability to serve the real economy.
This penalty will have a certain impact on the company's investment banking business. According to the company's disclosure, investment banking accounts for a significant proportion of the company's revenue, mainly dominated by bond business. Last year, bond financing revenue accounted for more than 80% of investment banking revenue.
This incident is not an isolated case within the industry. Recently, Dongwu Securities was investigated for issues related to the sponsorship of non-public stock issuance, indicating that the regulatory authorities are increasing their focus on the quality of private placement sponsorship.
Analysts point out that the regulatory authorities may want to standardize the quality of private placement sponsorship through such penalty cases and urge sponsoring institutions to strengthen the verification of the financial authenticity of listed companies. This also means that sponsoring institutions need to treat financial data from the past three years more cautiously to ensure the compliance and quality of private placement projects.
