China punishes two brokerages in IPO fraud crackdown
China’s securities watchdog has punished two brokerages for violating rules in helping fraudulent firms to list shares, underlining Beijing’s determination to bring credibility to a stock market some have likened to a casino.
The China Securities Regulatory Commission will fine Minsheng Securities 2 million yuan (HK$2.5 million) for failed due diligence in Shanxi Tianneng Technology’s attempt to launch an initial public offering in 2011, the regulator said in a statement on its website.
It also gave a warning to Nanjing Securities for a similar violation when it advised Guangdong Xindadi Biotechnology last year, the CSRC said. Both IPOs were halted after frauds were uncovered.
Tianneng and Xindadi provided falsified financial information in their offering documents, the CSRC said.
In May, the CSRC suspended Ping An Securities’ underwriting licence for three months after it helped fraudulent firm Wanfu Biotechnology to list shares in 2011.
China’s IPO market was suspended late last year as Beijing looks to clean up the opaque market and improve the quality of those companies that are allowed to list.
But IPOs in China are due to resume as early as next month.
China’s stock market has suffered from rampant corporate scandals, while financial irregularities by some companies have dented the reputation of Chinese stocks traded overseas.