How To Define The Criminal Responsibility Of IPO Power Rent-Seeking For Supervision And Containment Of Quitters In Securities Regulatory System?

The staff leaving the securities regulatory system to invest in the companies to be listed are being put on a "tight hoop curse".

Recently, there is a market rumor that the regulatory authorities have once again conducted additional checks on some shareholders with special identities in the proposed IPO projects. These special shareholders are strictly controlled by the regulatory authorities, including former officials who once worked in the CSRC system and former IEC members who served in the IEC.

In response to this, on April 19, the CSRC issued an article late at night in response to the rumor, saying that it would comprehensively investigate the enterprises under examination, strengthen the verification and disclosure, strictly check and control the stock ownership of the employees who have left the system. Meanwhile, it is also making efforts to fill in the shortcomings of the system and systematically standardize the stock taking behavior of the resigned personnel.

However, the SFC also said that for IPO applications involving system leavers investing in shares, the SFC normally accepted and strictly promoted the review and review procedures in accordance with the law. The content of the report that "the staff leaving the Securities Regulatory Commission system to invest in the enterprises to be listed will not be accepted by the CSRC, and the examination and approval of those that have been accepted will be suspended".

"If there is no restriction on the phenomenon that the former public officials take shares in the enterprises to be IPO, it will indeed have a bad impact on the market. It is easy to involve the interest exchange with the current supervisors, which will endanger the" three public "principle of the market Some market investment banks said.

For a long time, the direction of the former officials of the CSRC or the former IEC members after leaving the securities regulatory system is the focus of market attention. Visual China

IPO power rent-seeking is common

For a long time, the direction of the former officials of the CSRC or the former IEC members after leaving the securities regulatory system is the focus of market attention. The reason is that the "old people" in the system are still full of "energy" after leaving their jobs, and their special status in the past is enough to affect the regulatory judgment, especially the audit process of some IPO projects. This potential huge energy also provides the possibility for the relevant personnel to carry on the benefit transfer or the power rent-seeking.

Only around the end of 2020, Ouyang Jiansheng, the former head of the inspection team of the CSRC and Xi Longsheng, the former deputy leader of the Inspection Corps of the CSRC, were sentenced one after another for the transfer of interests. Mao Bihua, who once served as the head of the third inspection team of the CSRC, was also subject to disciplinary review and supervision for suspected serious violations of discipline and law.

Among them, Ouyang Jiansheng had invested in the IPO of Stanley (002588. SZ) and helitai (002217. SZ) with a total profit of nearly 50 million yuan. It was not until three months after Ouyang Jiansheng left the Securities Regulatory Commission that Ouyang Jiansheng asked to realize the relevant equity of "benefit transfer" in the newly established private investment institution.

What is more well known to the market is the "Feng Xiaoshu case" exposed in 2017. As a former deputy director of the issuance Audit Department of Shenzhen Stock Exchange, Feng Xiaoshu, during his tenure as a member of the issuance and Audit Committee of the CSRC, illegally gained 248 million yuan through the way of taking shares by surprise before listing and selling them at a high price after listing. The SFC decided to confiscate his illegal income and impose a fine of 251 million yuan. At the same time, the SFC took measures to prohibit the entry of the market for life.

At the moment when the Securities Regulatory Commission (CSRC) has strictly enforced the IPO audit, there are still cases in which the former officials of the securities regulatory system stormed into the listed companies through the PE institutions established after "going into the sea".

In May 2020, Zhejiang Mingtai holding Development Co., Ltd. (hereinafter referred to as "Mingtai") submitted the application materials for listing on the main board of Shanghai Stock Exchange to the CSRC. Eight months ago, six institutional investors had just bought into Mingtai. Six new shareholders subscribed for 23.55627 million shares of Mingtai shares in currency, and the capital increase price was 10 yuan / share. After the capital increase, the registered capital of Mingtai shares increased to 364 million yuan.

Among the six institutional investors, Pingyang Park Ming equity investment partnership (limited partnership) is the most prominent. According to public information, Pingyang Park Mingcheng was established on September 16, 2019, and participated in the capital increase of Mingtai shares on the day of its establishment. It is difficult not to make the market doubt that the establishment of the company is to take shares in the company to be listed.

In the relevant information of Pingyang Park Ming's shareholders, "Ni Yifan" has repeatedly appeared. It is not only the shareholder holding 19.84% shares of Pingyang Park Ming, but also one of the two investors of Hangzhou Zhipu Investment Management Co., Ltd. (hereinafter referred to as "Hangzhou Zhipu") as the manager of Pingyang Park Ming fund. Relevant information shows that Ni Yifan was once the deputy director of the inspection department of Zhejiang regulatory bureau of China Securities Regulatory Commission, and Hangzhou Zhipu was established after Ni Yifan left the CSRC in 2015.

In fact, Ni Yifan is not the only securities regulatory system background official who has invested in Mingtai shares.

Among the six institutional investors, Xue Qingfeng, an official of Zhejiang securities regulatory bureau, also looms behind Wenzhou Ourui equity investment partnership (limited partnership). From 2010 to 2012, the actual controller hidden behind Ningbo tongtaixin venture capital partnership (limited partnership) and Ningbo Tongyuan Youbo venture capital partnership (limited partnership) served as the IPO main board of the CSRC for several consecutive terms.

At present, Mingtai shares passed the examination and Approval Committee of the national development and Examination Commission on January 26 this year, but it has not yet obtained the approval document of the CSRC.

Tian Lihui, President of the Institute of financial development of Nankai University, pointed out that the transfer of interests and unfair competition are likely to occur among the employees who leave the securities regulatory system to invest in the companies to be listed. Based on the personal connections of the resignants in the system, some of them want to transfer their stocks to the quitters in the system at a low price for rent-seeking, so as to seek relaxation of audit or fast track, thus damaging market equity and infringing the interests of investors. Even, after using their power to pave the way for individual companies to be listed, a very few civil servants voluntarily resign in order to avoid legal punishment, so as to obtain the reports given by the companies to be listed through the amount of stock investment, thus forming a new type of corruption.

Many measures to prohibit the supervision of employees who have left their jobs to buy shares improperly can not get full effect

In the face of the improper stock taking behavior of the system's resigned personnel, the CSRC rarely uses such words.

In February 2021, the China Securities Regulatory Commission (CSRC) issued guidelines on the implementation of information disclosure for shareholders of enterprises applying for IPO. In the process of implementing the system, the CSRC requires the issuers and intermediary institutions to report the situation of the stock taking of the quitters in the CSRC system.

According to the CSRC, it is studying and formulating regulations to prohibit employees who leave the system from taking improper shares in the enterprises to be listed, which are mainly divided into four aspects: first, to clarify the situation of improper equity participation, to focus on preventing the use of the original public power to seek investment opportunities, and the existence of interest transmission in the process of entering shares; second, special talks and reminders are conducted before the personnel leave, and written commitments are required not to enter shares illegally The third is to formulate special audit guidelines to strengthen the targeted supervision on the improper equity participation of system leavers in the issuance audit, and timely transfer and strictly deal with those suspected of violating the law and discipline; the fourth is to improve the internal audit supervision and review procedures, strictly implement the system of official avoidance and communication reports with regulatory objects.

Wang Jiyue speculated that after the implementation of the new rules, if the former securities regulatory system personnel take shares in the companies to be listed and comply with the regulations, or will further extend their lock-in period, and hand over to the public security organs if there are improper shares or even illegal crimes. The intermediary institutions of securities companies should also check the working experience of natural person shareholders of the companies to be listed, and confirm whether there is any working experience in the securities regulatory system.

As for the new rules will be clear about the "improper" situation, Tian Lihui said that the possible specific behavior of improper "improper" equity participation is surprise and low price. However, just defining this behavior as a sign of surprise and low prices may lead to such problems going underground.

"It is not ruled out that" improper shares "can be acquired through various hidden ways such as discount and return, drawer agreement, illegal holding on behalf, shadow shareholders, etc Tian Lihui said.

Some leading domestic law firm partners told the 21st century economic reporter that "improper investment" is just a figurative statement, and there is no further definition on the legal level. "This may also lead to the difficulty in pursuing civil and criminal liabilities in the process of subsequent regulatory penalties, and more reliance on regulatory administrative penalties."

The above market investment banks also believe that the new rules will play a more deterrent role in the future. "At least the personnel in the original system can't come forward and destroy the market competition." However, the investment bank also pointed out that it is not easy to define and find improper shares. Drawer agreements, open buying and secret delivery, and other behaviors only trigger the violation of regulations in terms of false credit and false disclosure, "only suspicion does not constitute a reason for punishment".

"In the root, IPO still has huge benefits. Before this problem is solved, it is a temporary cure rather than a permanent cure." Wang Jiyue further pointed out that after the real implementation of the registration system in the future, the company will be selected by the market, and the huge benefits brought about by the IPO will also be weakened, and the related power rent-seeking and sudden equity acquisition will be eased.