Ten Billion Private Placement Sued Donghai Securities For Claim Of Default Debt

Recently, a lawsuit filed by 10 billion private placement of Qianwei investment filed a lawsuit against Donghai securities, a new third board securities firm, demanding Donghai securities to make full compensation for Qianwei's bond "16 Hongye 02", with a total cost of 65.95 million yuan.

Previously, on April 9 this year, Bodao fund also sued Donghai Securities for the same bond, requiring it to pay the principal and interest of the default debt totaling 55.28 million yuan.

Hongye Chemical Group Co., Ltd., the issuer of "16 Hongye 02", has been merged with 28 other affiliated enterprises for bankruptcy reorganization. As the bonds held by Qianwei investment and Bodao fund failed to be fully cashed, Donghai securities, as the lead underwriter and trustee of "16 Hongye 02", were successively appealed to the court for payment.

This is a rare case in the industry that creditors Sue three-party intermediaries.

Generally, in the industry, the buyer's organization will sue the borrower to recover the loss as much as possible, and the cases of suing the intermediary for compensation are rare. But this time, the two private equity funds have sued intermediary investment banks, asking for compensation.

Some people think that the purpose of investment banks is to conceal the bond issuing agencies' responsibilities.

In recent years, the principal underwriters have been sued by creditors for default of bonds

In the past few years, there have been no such cases in the industry.

In September 2016, Huachuang securities was sued by Guolian security fund for breach of private placement bonds, becoming the first securities company in the industry to be sued by fund companies for bond default.

At that time, Xiamen shengdawei Clothing Co., Ltd.'s "13 St. David" broke the contract, and the guarantee institution China Hisense was actually unwilling to compensate. As creditors, Huaxia Fund and guolian'an fund had to sue Huachuang securities, the main underwriter of the bond, successively, demanding that Huachuang securities bear the liability for compensation.

At that time, Huachuang securities was going to be listed on the back of Baoshuo. According to the past practice, if the underlying asset involves a major lawsuit, the reorganization committee will suspend the examination. Some people in the industry speculated that the fund company filed a lawsuit through the court, hoping to put pressure on Huachuang securities at this sensitive time, so as to get paid.

However, the case, which started in 2016, has not yet been concluded.

Another similar case is the case of default on the bond of the rich bird.

In April this year, Guoyuan securities, with Aijian securities as one of the four defendants, demanded that the four defendants jointly and severally compensate 76.81 million yuan of losses, 180000 yuan of lawyer's fees and litigation costs of this case to the "Guoyuan Pujiang No.1 bond hierarchical collective asset management plan" managed by the plaintiff.

"16 fugui01" is the first phase corporate bonds issued by Fuguiniao Co., Ltd. in August 2016, with a total amount of 1.3 billion yuan. Aijian securities acts as the lead underwriter and trustee.

In May 2018, Fuguiniao announced that it could not pay the principal and interest of "16 Fugui 01" accelerated repayment, and the bond was in material breach of contract. Soochow securities, on behalf of the asset management plan, filed for arbitration with fuguio and Aijian securities as the litigants, requiring Aijian securities to jointly and severally repay the principal and interest of 50 million yuan of bonds.

At the same time, KPMG, as an intermediary audit institution, was also punished by supervision in 2018 due to the breach of contract by fuguio, which is the first of the "four" to be punished. This year, he Sheng asset plans to jointly Sue KPMG Huazhen with fund managers including Jin Yuan Shun'an fund, Chang'an fund and China Securities construction investment fund.

Some industry insiders disclosed the progress of the case, saying that the case of rich bird has not been closed yet, but supervision has been involved.

The difficulty of claim intermediary: responsibility identification

In the case of the rich bird, it is not known whether the regulatory intervention will let Aijian securities assume the responsibility of settlement. After all, the case against Huachuang securities by Guolian security fund has not been closed for four years.

However, KPMG has been punished by supervision, but whether the ultimate creditor can successfully claim against KPMG depends on the follow-up progress of the case.

Even in the end of 2019, the regulatory authorities have imposed penalties on Debang securities, but there is no explanation on whether it needs to bear joint and several liability for bond compensation.

Some people in the industry complain: "for creditors, it's real to recover money, and punishing securities companies has little effect on solving debt itself."

For the above-mentioned cases, Lu zhebo, a lawyer from zhengce law firm, said that the professional institutions and personnel who handle securities business and issue audit reports, asset appraisal reports or legal opinions and other documents shall bear joint and several liabilities for the part of them that are responsible. If a false statement causes losses to the investor, the investor shall be liable for compensation for the part that he is responsible for. However, if there is evidence to prove that there is no fault, it shall be exempted from liability.

"It's hard for ordinary creditors to claim compensation, because the general debt default will not involve investment bank audit. However, if the CSRC has imposed administrative punishment, it can preliminarily determine part of its responsibility. However, whether the compensation can be recovered in the end depends on how the court decides. There is also a process of responsibility determination in the court. " Lu said.

Some investment banks in South China said that there is no practice in the industry to pursue the responsibility of the three-party institutions in the disputes over the breach of the creditor's rights. "Generally, there is always a way to pay back. If the financing party is really out of money, the creditor will pursue the guarantor and the intermediary, but for the time being, we have not heard of any securities firm paying the default debt."

"In the case of project financial fraud or fraudulent issuance, the most difficult point to pursue accountability for institutions such as investment bank audit lies in what role the intermediary plays in the whole process of fraud? In the past, Wanfu Shengke, kangdexin, LETV, Kangmei, etc. in each case, the role played by intermediaries such as investment banks is different, and the proportion of subsequent responsibilities is different, so it is difficult to quantify the responsibility, and the punishment results faced by subsequent investment banks are also different. " Said the investment bank.

On August 18, on the eve of the implementation of the gem registration system, the Supreme People's Court issued a number of opinions on judicial protection of gem, including "it is necessary to accurately grasp the standard of duty of care for the sponsor to conduct comprehensive verification and verification on the information disclosure materials such as the listing application documents of the issuer. On the basis of the special care obligation performed by the securities service institutions, the sponsor should still respond to the requirements of the issuer The objective and neutral substantial verification of business situation and risk can not meet the proof standard of exemption. "

"Although the supreme law has expressed its attitude, it does not have quantitative provisions. In the future, it will have to face the issue of" responsibility determination ", and there will be a lot of room for interpretation and mitigation." Said the investment bank.

"What the market is worried about is that when the door of the registration system is open, it is inevitable that some bad people will take advantage of the opportunity to fish in troubled waters. Although the system of collective litigation will gradually be established, it will be very difficult for the counterfeiters to bear the compensation liability when the fraud cases are exposed. At this time, if the intermediary agencies do not fulfill their duties, whether they should bear part of the compensation responsibility is really worth discussing. ”Chongqing xinyuanxing Law Firm lawyer Tang Tianhao thinks.

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