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Text/Daily Financial Report Lv Mingxia

On July 22, the verbal battle between Zheng Hongda, deputy director of the Western Securities Research Institute, and Shan Huiwei, chief analyst of the electronics industry, in the work group went viral on social media.

Judging from the screenshots, it seems that a staff member asked Shan Huiwei to coordinate working hours with the IR of Shenzhen Nan Circuit Company in the group.

But Shan Huiwei replied, wait a minute, I’m on the phone and will ask later.

The sales staff of Western Securities Research Institute requested Shan Huiwei, chief analyst of Western Securities Electronics, to contact the listed company, but Shan Huiwei said that he was in a conference call and would contact later.

Two minutes later, the dispute escalated. Zheng Hongda @Shan Huiwei in the group, questioning why he did not respond to the sales request in time, and said, "She (sales) called you about this at noon and asked about the company's time. Is it difficult?" Shan Huiwei responded that she was not capable enough to complete the task.

Afterwards, the emotions of both parties were obviously "ignited". Zheng Hongda said, "That's a good opportunity to make room. You should stop being the Chief of Electronics", while Shan Huiwei responded, "I haven't wanted to do this job for a long time."

Zheng Hongda immediately said, "The HR department will handle this tomorrow." Shan Huiwei announced the cancellation of all roadshows next week, saying, "I'm going to look for a job," and stressed, "It's the leadership who wants to fire me, not that I won't go to the roadshow."

The chat record ended with Shan Huiwei @everyone, in which he expressed his feelings towards Western Securities and his colleagues to the sales teachers and took personal responsibility. Currently, Western Securities is understanding the actual situation and handling the matter.

Just when the outside world thought that the conflict between the two was irreconcilable, early in the morning of July 23, the two posted on their Moments saying that they had "reconciled."

As to whether they really reconciled or were forced to do so under pressure from public opinion, we do not know, but the performance of both parties in the dispute did cause widespread controversy. Some people believe that Zheng Hongda's unilateral dismissal of employees in the WeChat group was inappropriate; at the same time, Shan Huiwei's direct statement that he would not accept the roadshow and unilaterally decided not to work was also contrary to professionalism.

This incident exposed problems in communication and management within Western Securities.

Such incidents are likely to trigger public opinion and may attract the attention of regulatory authorities. Inappropriate words and deeds between analysts may result in penalty points and other consequences, so each research institute needs to strengthen internal management and regulate the professional behavior of analysts.

It is worth mentioning that as a veteran securities firm, Western Securities has repeatedly stumbled on compliance issues, and its research institute has experienced frequent personnel changes. This incident may further exacerbate the problem of talent loss and put forward higher requirements for the company's compliance management.

The verbal dispute between the deputy director and the industry chief was originally a minor matter, but it also reflects the deep anxiety of Western Securities. In the past two years, the withdrawal rate and failure rate of Western Securities' IPO sponsorship projects have increased significantly, and the quality of the company's sponsorship business has been frequently questioned or punished by regulators, and the problem of "passing the test with illness" has continued.

In addition, Western Securities will be downgraded from a Class B investment bank to a Class C investment bank in 2023. Data shows that Class C investment banks are the worst type of investment banks, and their number only accounts for 20% of the total.