Recently, mainland securities firms Guosheng Securities and Xiangcai Securities disclosed that the two companies are under investigation for issues related to real-name account system, abnormal trading verification, and information security. They are facing a proposed three-month suspension of opening new securities accounts and a total fine of 2.35 million yuan (RMB) for both companies and 11 related individuals.
According to the announcements from Guosheng Securities and Xiangcai Securities, the two companies received relevant advance notices on September 24th and subsequently disclosed the proposed penalties and suspension of new account opening measures the following day.
Guosheng Securities faces a fine of 290,000 yuan, with a total of 810,000 yuan proposed for 6 related individuals; Xiangcai Securities faces a fine of 290,000 yuan, with a total of 960,000 yuan proposed for 5 related individuals. Additionally, both companies are proposed to be suspended from opening new securities accounts for three months and they are not allowed to add new securities brokerage clients during this period.
Liu Xiuran, the former head of the information technology department at Guosheng Securities, is deemed as an “inappropriate candidate.” Following the decision on relevant measures, he is prohibited from serving as a director, senior executive, or head of a branch of a securities company for a year.
Currently, the related penalties and suspension of account opening measures have not been officially enforced.
Guosheng Securities and Xiangcai Securities were registered for suspected violations of the securities account real-name system regulations on July 31st this year.
The issues identified for the two companies are similar, mainly involving significant deficiencies in brokerage business management, violation of providing information technology services, inadequacy in the real-name account system and abnormal trading verification, as well as failure to report information security risks as required.
In addition to the issues mentioned for Xiangcai Securities, they were also found to have inadequate management in terms of employee integrity and ethical conduct.
According to reports from the Financial Union News, on September 24th, at least 25 penalty or regulatory documents were released in multiple regions, involving 7 securities firms, as well as futures companies, investment consulting organizations, and individuals. Apart from Guosheng Securities and Xiangcai Securities, the issues for the other 5 securities firms were identified in their branches or business departments.
For example, the Sichuan branch of Zheshang Securities was found to have inadequate internal management and unsuccessful follow-ups on abnormal customer transactions. One branch of Jinyuan Securities was reported to have problems with broker management and facilitating improper transactions for customers.
A business department of Guorong Securities was involved in misleading promotion, where individual employees forwarded securities investment advice to investors without signing investment advisory service agreements. Issues related to investor and employee management were found in the Zhejiang branch of Huayuan Securities.