China’s central bank issues rare public rebuke of Xin Hua Fund over reporting failures
The incident marks an unusual intervention by the People’s Bank of China, which typically leaves oversight of mutual funds to the securities regulator
Xin Hua Fund Management has been reprimanded by China’s central bank for submitting inaccurate financial data and failing to rectify the issue in a timely manner, in a rare public rebuke of a mutual fund firm over compliance lapses.
The Chongqing branch of the People’s Bank of China summoned the firm for regulatory talks, according to a statement on its website, ordering it to strengthen oversight of raw data quality and improve its financial reporting practices.
During the meeting, regulators warned against data falsification, while the firm acknowledged shortcomings in its reporting processes and outlined corrective measures, the statement said.
The episode has thrust Xin Hua Fund – a relative minnow in China’s 38 trillion yuan (US$5.6 trillion) fund industry – into the spotlight, highlighting weaknesses in its internal controls.
Public criticism of a mutual fund manager by the central bank is uncommon, as oversight of the sector typically falls under the China Securities Regulatory Commission.
The central bank did not disclose the specific nature of the data errors. The statement said the Chongqing branch would report the case to relevant authorities and monitor the firm’s rectification efforts.