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The requirement of "being responsible for reporting" is implemented on individuals. New regulations are introduced to further restrict insurance agents. Information on rejected projects will be publicly written into the "personal resume" of insurance agents, and insurance agents whose business has been suspended will be classified separately.

Recently, in order to strengthen the reputation constraints on sponsors, implement the requirement of "being responsible for filing" to the person, and improve the publicity mechanism for negative evaluations of sponsors, the China Securities Association has further revised the "Rules for Sponsorship Business", including adding information on projects that sponsors have withdrawn and rejected to the sponsors' classification list A (comprehensive practice information), and adding a new sponsors' classification list D (suspension of business).

According to Wind data statistics, as of July 23, 331 planned IPO projects have been terminated this year and 94 refinancing projects have been terminated.

Assuming that there are at least two signing sponsors for each project, the above-mentioned revoked projects involve hundreds of sponsors. Among them, at least 43 sponsors have terminated two or more projects.

Data from the China Securities Association shows that as of June 23 this year, 71 insurance agents were punished and included in the "Class C" list, of which 39 were fined for IPO projects, and more than 10 were fined more than once.

In addition, as of now, four insurance agents have had their business suspended by regulators due to failure to perform their duties.

Concentrate on withdrawing and rejecting projects

According to the recent revisions to the "Underwriting Business Rules" by the China Securities Association, information on projects withdrawn or rejected by sponsor representatives will be added to Classification List A (comprehensive practice information). Previously, Classification List A mainly included name, practice institution, number of sponsored projects, and whether the level evaluation test met the basic requirements.

According to Wind data from China Business News, as of July 23, 425 IPO and refinancing projects have been terminated this year.

Looking at different brokerage firms, a total of 8 brokerage firms have withdrawn 20 or more IPO and refinancing projects. Among the top 5 brokerage firms with the largest number of withdrawn projects, CITIC Securities has 51 projects, CITIC Construction Investment Securities has 40 projects, Haitong Securities has 27 projects, CICC has 24 projects, and Guojin Securities has 22 projects.

Specifically speaking of the number of individual project withdrawals by underwriters, according to a rough estimate by the First Financial Daily based on Wind data, at least 43 underwriters have terminated two or more projects in their names this year, distributed among nearly 20 securities firms.

Among them, CITIC Securities has the largest number of people with 8, CICC and Minsheng Securities have 5 people each, CITIC Construction Investment has 4 people, Haitong Securities and Guotai Junan have 3 people each, Guojin Securities and Kaiyuan Securities have 2 people each, and more than 10 other securities companies have 1 person each. In addition, CITIC Securities and Minsheng Securities each have one insurance agent, and the number of IPO withdrawal projects is 3.

Since the beginning of this year, regulators have emphasized that "once you file, you're responsible" and that project withdrawal will not affect the implementation of inspections. Many IPO projects are still held accountable after withdrawal.

An analyst from a securities firm told China Business News that adding information on project rejections by sponsors to the classification management will further implement the requirement of "taking responsibility once you file" on individuals. This will create certain pressure on sponsors who have a large number of rejected projects, and will also force sponsors to strictly control project quality and improve their professional capabilities.

4 insurance agents had their business "suspended"

While the number of project withdrawals has increased dramatically, securities firms and investment banks have also received a series of fines this year, and a large number of insurance agents have been fined.

Recently, the Shanghai Stock Exchange issued a regulatory warning to Hengda Intelligent Control, a company that plans to list on the Science and Technology Innovation Board, and its intermediary institutions CITIC Construction Investment Securities and Lixin Law Firm. Two underwriters and two signing accountants were also given regulatory warnings. Prior to the regulatory warning, Hengda Intelligent Control and its underwriters voluntarily withdrew their IPO application documents in May this year, and the review was terminated.

According to information from the official website of the China Securities Association, there were 71 insurance agents who were included in classification list C (penalty classification) in the first half of this year. Among them, 39 insurance agents were fined for IPO projects, and more than 10 insurance agents were fined more than once.

For example, Li Zeye of SDIC Securities, who has been fined the most times, was criticized by the Shanghai Stock Exchange in January this year for failing to perform his duties as a sponsor and failing to implement due diligence procedures in the Rongsheng Bio IPO project. Prior to this, the sponsor had been subject to self-discipline and regulatory penalties by the Shenzhen Stock Exchange and the China Securities Regulatory Commission in 2022.

There are also insurance agents from Minsheng Securities, West China Securities, Guohai Securities, Haitong Securities, West China Securities, Everbright Securities, CICC and Guotou Securities who have been punished twice. Some insurance agents were punished by both the exchange and the CSRC for the same project.

According to the revised content of the new regulations on sponsor representatives, in addition to classification list C (penalty classification), a new classification list D (suspension of business classification) for sponsor representatives will be added. It will mainly publish the names of sponsor representatives who have been subject to administrative penalties by the CSRC in the past three years, as well as those who have been subject to administrative supervision measures such as being identified as inappropriate candidates or temporarily not accepting documents related to administrative licenses by the CSRC, and those who have been subject to disciplinary sanctions such as being identified as unsuitable to engage in related businesses or temporarily not accepting signed documents or temporarily not accepting relevant business documents issued by industry self-regulatory organizations, and are in the execution period.

Since the beginning of this year, four insurance agents have had their business suspended by regulators due to failure to perform their duties.

Among them, two sponsors of Zhejiang Securities, Li Jinghui and Wang Yiming, were disciplined by the Shanghai Stock Exchange for not accepting the issuance and listing application documents and information disclosure documents signed by the sponsor representatives within three months.

In addition, Huaxi Securities and its two underwriters were fined for violating regulations in the 2020 fixed increase project of Jintongling. The Shenzhen Stock Exchange imposed a two-year suspension of document acceptance on the two project signing underwriters, Liu Jingfang and Zhang Ran. At the same time, the two underwriters were also identified as inappropriate candidates by the China Securities Regulatory Commission.

In the opinion of the above-mentioned securities firm personnel, further refining the classification of penalties for insurance agents and improving information disclosure and transparency will enable issuers to have a more accurate understanding of the past practice of insurance agents. At the same time, it will play a certain supervisory role in helping insurance agents improve their practice quality and avoid violations.