Regulatory Authorities Strengthen Intermediary Accountability And Many Securities Companies Are Punished For Illegal Bond Underwriting Business

With the increasing number of bond defaults, there are more and more underwriters stepping on the thunder.

Due to the fact that many default bonds have exposed many bond underwriting problems such as insufficient due diligence and lack of due diligence of intermediary agencies, regulators have repeatedly emphasized the responsibility of intermediary agencies in promoting the disposal of default bonds.

Recently, some securities companies such as Huafu securities, Western securities and new era securities were named for their illegal bond underwriting business. In the process of bond underwriting due diligence, the three securities companies have some problems, such as insufficient effectiveness of verification of internal control operation related to external guarantee of issuers, insufficient attention to the operation of corporate governance and internal control of issuers, and insufficient application of due diligence methods.

"In the past few years, the great development of the bond market has led to more and more underwriters such as securities companies and commercial banks. Hundreds of institutions crowded into the market, which will inevitably lead to the phenomenon of mixed good and bad, such as some of the Commission in the underwriting process is greasy. With the increase of bond defaults, the blind running industry can no longer be sustained, and the tightening of supervision also makes the industry enter the stage of consolidation. " On July 8, a bond underwriter of a large securities firm told the reporter of the 21st century economic report.

Many securities companies punished

According to the disclosure of CSRC, Huafu securities, Western securities and new era securities have been taken administrative supervision measures of supervision conversation by Anhui securities regulatory bureau, and recorded in the integrity file.

According to the 21st century economic report, both Huafu securities and Western securities have related violations due to the underwriting of "17 Shengyun 01" and "16 Shengyun 01" of Shengyun environmental protection (300090. SZ), while the new era securities is due to the underwriting of Zhonghong Holding Co., Ltd.'s bonds "16 Hong bond 01", "16 Hong bond 02" and "16 Hong bond 03".

All of these bonds have defaulted earlier. Among them, Shengyun environmental protection and Zhonghong holdings both broke the contract for the first time as early as October 2018, and the two companies also went to the way of delisting after default.

In fact, many underwriters of default bonds are punished by the regulatory authorities after the event.

As early as 2018, Zhongshan securities was issued a warning letter by Heilongjiang Securities Regulatory Bureau due to irregularities in the process of bond underwriting and entrusted management of Yiyang group. Yiyang group defaulted on its first bond in November 2017, and then entered into restructuring. But it was not until May this year that the draft reorganization was approved by the court.

The regulatory authorities pointed out that Zhongshan securities did not conduct comprehensive due diligence on relevant subjects such as Yiyang group and its actual controller, failed to verify the part-time job situation and foreign investment of relevant personnel, the draft of due diligence was not perfect, the entrusted management was not in place, and effective measures were not taken to comprehensively investigate and continuously investigate the credit status, solvency and continuous operation of Yiyang group Attention and many other issues.

According to the reporter of the 21st century economic report, an earlier regulatory circular also revealed the illegal behavior in the bond contracting process of Zhongshan securities.

According to the documents, Zhongshan securities signed a service agreement with two Shanghai investment consulting companies to pay service fees to the two companies in the process of bond contracting. The regulatory authorities verified that there was a large amount of capital flow between the bank accounts of Xing Jun, the head of the bond financing headquarters of Zhongshan securities, and the bank accounts of the two companies. His spouse also held shares in the affiliated companies of one of the investment consulting companies. Xing Jun did not truthfully disclose the interest relationship between his spouse and the investment consulting company to Zhongshan securities.

In the case of fraudulent issuance of Wuyang bonds, Debang securities was ordered to correct and give a warning because it did not fully check the accounts receivable and investment real estate of the issuer Wuyang construction.

"At present, it is the consensus of all participants in the market to actively strengthen risk prevention and control. In terms of risk control, the company has established a system to adapt to business development, with risk identification and control as the core. It promotes the development of the company through compliance management, strengthening internal control and other measures. I believe that with the continuous improvement of the bond default handling mechanism, the market will be more standardized and mature. " According to the general manager of the compliance department of a securities company in South China.

Strengthen supervision

Wind data shows that as of July 8 this year, 67 credit bonds have defaulted, with a scale of 83.577 billion yuan. The number of bond defaults is increasing, but the number of bond defaults is increasing.

"After the default, the disposal of many bonds was very slow. For example, the restructuring plan of Yiyang group experienced many twists and turns, and it was not until this year that the final implementation. However, the person in charge at that time had already left his post, and the disposal work has always been a difficult problem." A private equity firm told 21st century economic reporter.

At the beginning of this month, the people's Bank of China, together with the development and Reform Commission and the China Securities Regulatory Commission, jointly issued the notice of the development and Reform Commission of the people's Bank of China and the Securities Regulatory Commission on matters related to the default disposal of corporate credit bonds. The notice clearly defines the responsibilities and obligations of all parties in default disposal and proposes to clarify the responsibilities of intermediary agencies.

For example, as far as the lead underwriter and trustee are concerned, it is required to strengthen the monitoring and analysis of the operation and financial status of the issuer, and pay close attention to the possible impact of the issuer's major litigation, major asset restructuring, asset sale, asset seizure, and equity change on the issuer's solvency.

"At present, the regulatory authorities are more systematic in strengthening the control of the overall market, and the internal management of securities companies is also stricter. In fact, this is also the general direction that the regulatory authorities have been encouraging financial institutions to strengthen internal control and management." Said the securities trader.

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