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China Fund News reporter Maureen

On July 26, the Jiangxi Securities Regulatory Bureau issued nine fines in a row, and several former Guosheng Securities management personnel were subject to regulatory talks and disciplinary measures. Among them, Qiu Qiang, a former financial tycoon, received another fine and was required not to serve as a director, supervisor, senior manager or branch manager of a securities company for 10 years.

In response, Guosheng Securities said that this administrative supervision measure mainly targets related issues in corporate governance and business development before Guosheng Securities was taken over by the China Securities Regulatory Commission in July 2020. Guosheng Securities firmly supports the regulatory penalty decision and has initiated internal accountability in accordance with regulatory requirements.

Guosheng Securities also stated that since returning to the state-owned assets of Jiangxi Province at the end of 2022, it has comprehensively strengthened the party's leadership, standardized and improved corporate governance, and comprehensively improved internal control management. It is currently operating in compliance and stability, and has a good development momentum. The company will earnestly study and implement the spirit of the Third Plenary Session of the 20th CPC Central Committee and the new "Nine National Regulations", implement the deployment of the Central Financial Work Conference, comprehensively improve compliance management capabilities, maintain the bottom line of no major risk events, firmly grasp the fundamental purpose of serving the real economy, do a good job in the "five major articles" of finance, and strive to promote high-quality development.

Financial tycoon severely punished again

The Jiangxi Securities Regulatory Bureau pointed out that Guosheng Securities failed to truthfully report the actual shareholding ratio of shareholders as required before being taken over, the board of directors and management personnel performed their duties beyond their authorization, the internal control of the stock pledge business was imperfect and financing was provided to shareholders' related parties, core business personnel violated the regulations on honest employment, and authorized personnel who did not have the qualifications for senior management to actually perform senior management duties, etc., reflecting that the company failed to effectively implement compliance management.

Therefore, the Jiangxi Securities Regulatory Bureau ordered Guosheng Securities to impose penalties on Sun Jian and other relevant stock pledge business participants within 10 working days from the date of this administrative supervision measure in accordance with the company's relevant system regulations, and to submit a written report within 3 working days from the date of the decision.

In addition, Zhu Yu, then vice president and head of the risk control committee of some projects, Jiang Fei, then compliance director and chief risk officer and senior approval executive for relevant stock pledge projects, Liu Guoning, then vice president and head of the investment decision-making committee for relevant stock pledge projects, and Huang Xiaohong, then head of the Debt Financing Department 2 of the Fixed Income Headquarters, were all subject to regulatory talks.

The then chairman of Guosheng Securities Qiu Qiang, the then president and senior approval executive of relevant stock pledge projects Ma Yuejin, the then financial director and head of the risk control committee of relevant stock pledge projects Hu Xiaoning, and Tang Guogen, the direct party involved and head of relevant stock pledge business, were identified as inappropriate candidates.

It is worth noting that the former chairman Qiu Qiang is not allowed to serve as a director, supervisor, senior manager or branch head of a securities company or actually perform the above duties within 10 years from the date the regulatory measures decision is made.

Former president Ma Yuejin is prohibited from serving as a director, supervisor, senior manager or head of a branch of a securities company or actually performing such duties within three years, and his record will be included in the integrity file of the securities and futures market. Hu Xiaoning and Tang Guogen are both banned from the industry for one year.

In fact, in addition to the securities industry's 10-year "ban order" issued to Qiu Qiang, the former Jiangxi Banking and Insurance Regulatory Bureau of the China Banking and Insurance Regulatory Commission issued a lifetime ban on Qiu Qiang in the banking industry in 2022.

The former Jiangxi Banking and Insurance Regulatory Bureau of the China Banking and Insurance Regulatory Commission stated that Qiu Qiang, the former chairman of Zhongjiang Trust (i.e. Cedar International Trust), was directly responsible for Cedar International Trust's illegal investment in the establishment of non-financial subsidiaries and related transactions, failure to effectively perform management responsibilities, and illegal issuance of loans with its own funds and failure to report related transactions. He was given a warning and banned from working in the banking industry for life.

Among the four people banned from the industry, former president Ma Yuejin resigned from his position as president by the board of directors in the first half of 2017 due to "personal reasons."

Jiangxi state-owned assets take over

Performance continues to improve

With the entry of Jiangxi State-owned Assets in mid-2022, Guosheng Securities' operating capabilities have continued to improve. It is worth noting that Guosheng Securities' stock pledge business was restarted after a four-year hiatus, and two projects were successfully completed in the first half of 2023.

In 2023, when the overall performance of securities companies declined, Guosheng Securities' operating profit and net profit increased by 176.68% and 145.97% respectively compared with the same period of the previous year. The company attributed the main reason for the increase in net profit to the recovery of the bond market and the increase in proprietary business income.

By 2024, Guosheng Securities' net profit in the first half of 2024 will be 116 million yuan, a year-on-year decline of 43.08%. Although Guosheng Securities' net profit has declined significantly, from a broader perspective, in the first half of this year, the overall performance of securities companies was under pressure due to the combined influence of multiple factors such as the low level of the secondary market and the slow recovery of the primary market. So far, nine securities companies have expected their net profit attributable to their parent companies to drop by more than 50% year-on-year. In addition, Jinlong Co., Ltd. and Tianfeng Securities had negative net profits attributable to their parent companies in the first half of the year.

In the secondary market, after holding Guosheng Securities for about 8 years, Guosheng Financial Holdings issued an announcement on January 13, 2024, stating that in order to further integrate resources, improve efficiency, focus on the main business of securities, and effectively enhance the ability and effectiveness of serving the real economy, the company intends to absorb and merge Guosheng Securities. It also pointed out that "after the completion of the absorption and merger, it will be beneficial for the company to focus on the main business of securities, enhance the brand effect advantage of Guosheng Securities, and improve the company's comprehensive financial service level, and better play the role of Guosheng Securities as the only full-license securities company in Jiangxi Province."

It is worth noting that Guosheng Financial Holdings also plans to change the securities name to "Guosheng Securities" on the basis of completing the absorption and merger of Guosheng Securities. This was interpreted by investors as Guosheng Securities' "curve listing". Its stock price rose against the trend in mid-to-late January and even hit three daily limits in a row in late April.

Editor: Xiaomo

Audit: Wooden Fish

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