BEFORE YOU GO...
Check how Shufti Pro can verify your customers within seconds
Request DemoNo thanks
SHANGHAI – China’s security watchdog vowed a number of measures to clean up its financial markets as well as mending the way firms as Beijing looks to limit reputational damage from a number of high-profile accounting scandals.
Yi Huiman, Chairman of China’s securities regulator said that China will maintain zero tolerance of financial fraud, insider trading, and market manipulation. Yi further said that accounting scandals at companies including Kangmei Pharmaceutical and Kangde Xin Composite material Group have affected investors’ trust in China’s financial markets.
According to Kangmei Pharmaceutical, on Thursday it was fined 600,000 yuan ($84,438.06) by the CSRC for increasing revenues and falsifying bank deposits. The regulator also banned executives who exaggerated profits for the four years through 2018 by 11.9 billion yuan at Kangde Xin from working for listed companies or companies in the securities sector, while a final penalty is to be made yet.
China plans to take stronger action on brokers, accountants, and law firms who advise companies who continue to commit fraud. China will intensify its reform of how initial public offerings (IPOs) are conducted, introducing a registration-based system to enhance the transparency and disclosure of monetary information.
Yi added that more efforts are going to be made to support the prevention and control of the COVID-19 pandemic and therefore the country’s economic recovery. CSRC is additionally keeping close contact with overseas regulators to enhance cross-board regulatory cooperation in recent fraud cases of Chinese companies listed abroad.
Chinese regulators, including the CSRC and the State Administration for Market Regulation (SAMR) has started an investigation into Luckin Coffee because the coffee chain comes under scrutiny for fabricating sales deals worth many dollars. Bankers and investors have notified that Luckin’s issues were likely to weigh on other Chinese companies considering a U.S. IPO – a group already suffering from the trade tensions of 2019.