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Western Securities employees quarreled with each other remotely, which swept the financial circle. On July 22, a chat record attracted market attention. Specifically, Zheng Hongda, deputy director of Western Securities business and chief analyst of the technology industry, and Shan Huiwei, chief analyst of the electronics industry, had an argument over issues such as coordinating roadshow time. The emotional irritation in the workplace may also reflect the high pressure on securities research institutes in recent years. Some industry insiders said that team leaders need to pay attention to creating and maintaining a good team atmosphere and promote cooperation and trust among employees. In the context of public offering commission cuts, securities research institutes also need to continuously transform and innovate to adapt to market demand.

The deputy director of the institute and the chief of electronics exchanged accusations

On July 22, screenshots of chat records from the work group of Western Securities Research Institute went viral in the financial circle. According to the chat records, the two parties involved in the argument were Zheng Hongda, deputy director of Western Securities Business and chief analyst of the technology industry, and Shan Huiwei, chief analyst of the electronics industry. Looking back at the cause of the incident, on the evening of July 21, a salesperson from Western Securities Research Institute asked Shan Huiwei to contact the listed company to coordinate the roadshow time next Friday. Shan Huiwei said that he was in a conference call at the time and would contact him later.

However, a normal work request became the fuse of the dispute. Only two minutes after Shan Huiwei responded, Zheng Hongda came forward and said that the salesperson had been urging this matter since noon, and questioned Shan Huiwei: "Is it difficult to ask the company about the time?" Then, Shan Huiwei retorted, "You are capable, go and ask." For a while, the two sides were emotional. Zheng Hongda said, "That's a good opportunity to make room, Chief Electronics Officer, you should stop doing this." Shan Huiwei said bluntly, "I didn't want to do this for a long time." Zheng Hongda immediately replied, "The matter will be resolved by human resources tomorrow."

However, on the evening of July 22, both parties posted the same text on WeChat and stated, "As brothers in the same trench, let's work together to do a good job in research."

Regarding how the company handles the relevant incident and the possible impact on the company, a Beijing Business Daily reporter interviewed Western Securities. Western Securities said that the company has paid attention to the relevant remarks, which were mainly caused by misunderstandings among relevant members due to poor communication in discussing work arrangements. It is regrettable that the relevant information spread to the Internet and caused adverse effects. The company attaches great importance to it and has made relevant work arrangements and personnel management in a timely manner, emphasizing that it always adheres to customer-centricity and provides customers with professional and high-quality services.

According to information disclosed by the China Securities Association, based on the registration date, Zheng Hongda worked as a securities investment consultant (analyst) at Haitong Securities from May 2016 to January 2024, and joined Western Securities on February 19, 2024. At that time, the news that "Zheng Hongda, chief analyst of the technology industry at Haitong Securities, joined Western Securities as deputy director of the research institute and was mainly responsible for TMT research" once attracted market attention. If we trace back further, Zheng Hongda worked at Guojin Securities from July 2011 to March 2016, and registered for general securities business and securities investment consulting (analyst) qualifications.

Compared with Zheng Hongda's "new job", Shan Huiwei has been working at Western Securities for four years. According to the China Securities Association, Shan Huiwei has registered for Western Securities' general securities business qualifications since November 2020, and registered for securities investment consulting (analyst) qualifications in December 2022.

Financial commentator Guo Shiliang said that securities firms are under great pressure, and conflicts may occur occasionally, and poor communication may also lead to misunderstandings. For securities firms, it is necessary to focus on setting up a reasonable assessment mechanism and making reasonable personnel adjustments and workload arrangements.

Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, believes that this conflict may have been caused by a trivial matter, but in fact it may reflect deep-seated problems in the workplace. In a tense working environment, employees may be more likely to lose control of their emotions because of trivial matters. Therefore, companies and teams need to pay attention to employees' work pressure and mental health and provide necessary support and help. From the perspective of team atmosphere, relevant conflicts may have a negative impact on team atmosphere. Team leaders need to actively create and maintain a good team atmosphere and promote cooperation and trust among employees.

Research report business was once “named”

As an institution involved in the above incident, Western Securities was established in January 2001 with a registered capital of 4.469 billion yuan. Its actual controller is Shaanxi Investment Group Co., Ltd. Focusing on performance, in the first quarter of 2024, Western Securities' operating income and net profit attributable to shareholders were 1.595 billion yuan and 196 million yuan, respectively, down 12.01% and 45.24% year-on-year. According to the 2023 annual report, its operating income and net profit attributable to shareholders increased by 29.87% and 170.76% year-on-year, respectively.

It is worth mentioning that looking back to 2023, Western Securities was also warned by regulators for research report business issues. On June 25, 2023, the Shaanxi Securities Regulatory Bureau issued a document to issue a warning letter to Western Securities, Liu Qinghai, Zhao Cong, and Mu Qiguo. Specifically, Western Securities has an imperfect internal control mechanism for issuing securities research reports and lax quality control of research reports. Liu Qinghai, Zhao Cong, and Mu Qiguo, as the then Chief Strategy and Human Resources Officer, Head of the Human Resources Department, and Head of the Research and Development Center of Western Securities, are responsible for the above-mentioned violations.

On the same day, the Shaanxi Securities Regulatory Bureau also pointed out that the relevant securities research reports signed by Xu Guanghui, Luo Yamei and Yang Jingmei had problems such as imprudent research methods and lack of reasonable justification for some assumptions, and took administrative supervision measures of issuing warning letters to the above-mentioned personnel. According to the China Securities Association, Luo Yamei and Yang Jingmei are currently analysts under Western Securities, and Xu Guanghui was an analyst at Western Securities. Since February 2023, he has been transferred to Huaxi Securities as an analyst.

In its 2023 annual report, Western Securities stated that the company attached great importance to the above issues, actively formulated a rectification plan, organized and carried out rectification and related accountability work, and the relevant issues have been rectified and the rectification report has been submitted as required. In the future, the company will continue to pay attention to the improvement of the quality of securities research reports and enhance the prudence and attention of the writers and signatories to the relevant reports.

Anxiety about revenue decline

Overall, the volatile workplace emotions may also reflect the high pressure on securities research institutes in recent years. The advancement of the reform of reducing fees and commissions for public funds this year has also made sell-side research institutes further anxious about the decline in revenue.

In April 2024, the China Securities Regulatory Commission formulated and issued the "Regulations on the Management of Securities Trading Fees for Publicly Offered Securities Investment Funds", which will be officially implemented in July. The main contents include reducing the fund stock trading commission rate and lowering the upper limit of the proportion of securities trading commissions allocated by fund managers.

According to Oriental Wealth Choice data, the brokerage fund sub-account commission income in 2023 was 16.836 billion yuan, a year-on-year decrease of 10.8% from 18.874 billion yuan in 2022.

Compared with the overall industry data, the shrinkage of Western Securities' fund sub-warehouse commission income is more obvious. Data shows that Western Securities' fund sub-warehouse commission income in 2023 was 122 million yuan, a year-on-year decrease of 37.97%, ranking 35th among the 291 securities companies for which data is available. According to the official website of the China Securities Association, there are currently 2,697 employees in Western Securities, including 58 securities investment consultants (analysts).

Wang Peng said that under the above background, securities research institutes also need to continuously transform and innovate to adapt to market demand, continuously strengthen research capabilities, pay attention to customer needs, strengthen team collaboration and communication skills, and enhance the overall strength of the team. In addition, while pursuing business development, it is also necessary to strengthen risk management and compliance awareness.

Guo Shiliang also suggested that in the face of the industry situation of declining fund sub-account commission income, securities firms need to create personalized and distinctive businesses to enhance their own attractiveness, strengthen their business capabilities and improve their competitive advantages.

Beijing Business Daily reporter Hao Yan