SHANGHAI, May 15 (Reuters) - China’s securities watchdog promised a series of measures to clean up its financial markets as well as reforming the way companies as Beijing looks to limit reputational damage from a number of high-profile accounting scandals.
China will maintain zero tolerance of financial fraud, insider trading and market manipulation, Yi Huiman, chairman of China’s securities regulator said at an event on Friday held for the National Investor Protection Day.
Accounting scandals at companies including Kangmei Pharmaceutical and Kangde Xin Composite Material Group, have damaged investors’ trust in China’s financial markets, Yi said.
Kangmei Pharmaceutical said on Thursday it had been fined 600,000 yuan ($84,438.06) by the CSRC for inflating revenues and fabricating bank deposits. The regulator also barred last July executives responsible for overstating profits for the four years through 2018 by a total of 11.9 billion yuan at Kangde Xin from working for listed companies or companies in the securities industry for life, while a final penalty has yet to be made.
Yi said China will take firmer action on brokers, accountants and law firms who advise companies who go on to commit fraud.
China will step up its reform of how initial public offerings (IPOs) are conducted, bringing in a registration-based system to improve THE transparency and disclosure of financial information, Yi said.
More efforts will be made to support prevention and control of the coronavirus outbreak and the country’s economic recovery, he added.
CSRC is also keeping close contact with overseas regulators to improve cross-board regulatory cooperation in recent fraud cases of Chinese companies listed abroad, Yi said.
Chinese regulators, including the CSRC and the State Administration for Market Regulation (SAMR) have launched an investigation into Luckin Coffee, as the coffee chain comes under scrutiny for fabricating millions of dollars worth of sales deals. Bankers and investors have warned that Luckin’s issues were likely to weigh on other Chinese companies considering a U.S. IPO - a group already affected by the trade tensions of 2019.
$1 = 7.1058 Chinese yuan renminbi Reporting by Zoey Zhang, Luoyan Liu and Andrew Galbraith, editing by Louise Heavens