Regulators continue to “sharpen their swords” on the research and reporting business of securities firms
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In recent years, regulators have continued to maintain strict supervision over the research and reporting business of securities companies. They have carried out special “double random” on-site inspections of research and reporting business in the entire industry, and have imposed penalties on non-compliant securities companies and research report authors. The reasons for the punishment include the enforcement of the content system. Insufficiency, lack of prudence in the production of research reports, etc. It is worth noting that since the beginning of 2024, many institutions such as Huaan Securities and Guoyuan Securities have been punished for violations in the research and reporting business.
Guoyuan Securities collects another fine
On March 1, the Anhui Securities Regulatory Bureau issued the “Decision on Taking Measures to Issue Warning Letters against Guoyuan Securities Co., Ltd.”
The Anhui Securities Regulatory Bureau pointed out that after investigation, Guoyuan Securities had four problems, including an insufficient business management system for publishing securities research reports, insufficient prudence in the production of individual research reports, insufficient strict quality control and review, and flaws in the internal control process. The Anhui Securities Regulatory Bureau decided to take administrative supervision measures by issuing a warning letter to Guoyuan Securities, and recorded it in the securities and futures market integrity files.
This is not the first time Guoyuan Securities has been punished for violations in its research and reporting business. As early as October 18, 2021, Guoyuan Securities was banned by the Anhui Securities Regulatory Bureau due to problems such as unclear data source labeling, insufficient data selection, insufficient objective analysis of the research report, and insufficient quality control and compliance review in the industry research report. Issue a warning letter and record it in the securities and futures market integrity files. At the same time, Li Dian, the signed analyst of the relevant research report, was also subject to the administrative supervision measures of issuing a warning letter.
Huaan Securities received double punishment
In February this year, Huaan Securities was also punished by the Shenzhen Stock Exchange and the Anhui Securities Regulatory Bureau for violating regulations in research reports. On February 5, the Shenzhen Stock Exchange issued an announcement stating that on January 31, February 25, and March 25, 2023, Zuojiang Technology, a listed company on the Shenzhen Stock Exchange, announced three times in a row that the company’s stock transactions may be delisted. Warning announcement. But on April 25, 2023, Huaan Securities released an in-depth research report titled “The Shining Pearl in the Computing Power Field, DPU Takes Advantage of the Momentum” and recommended buying Zuojiang Technology. After investigation, it was found that the analysis conclusions of the relevant research reports released by Huaan Securities were insufficiently based, the conclusions were not prudent, the investment risks were not fully disclosed, and the company did not strictly control the quality of the research reports.
To this end, the Shenzhen Stock Exchange decided to adopt self-regulatory measures of written warnings against Huaan Securities, and required the company to take effective measures to rectify violations, further strengthen the company’s quality review and compliance review of research reports, and ensure that the sources of information in research reports are legal and compliant. , the analysis conclusion has a reasonable basis, fully reveals the investment risks, and avoids misleading the market.
The Anhui Securities Regulatory Bureau also issued an announcement on February 18 stating that the research reports issued by Huaan Securities involving “Zuojiang Technology” were not carefully produced. The Anhui Securities Regulatory Bureau decided to take administrative supervision measures to order corrections and recorded it in the securities and futures market integrity files. At the same time, Huaan Securities is required to submit a written rectification report to the Anhui Securities Regulatory Bureau within 30 days from the date of receipt of the decision letter.
Judging from the content, Huaan Securities mentioned in the above research report that AI catalyzes the intensive explosion of computing power demand, and DPU will be the key to dealing with the computing power problem. Zuojiang Technology has developed its own controllable DPU chip and has mastered the core competitiveness of the industry. It is worth noting that on May 4, 2023, Zuojiang Technology announced that it would “wear a star and wear a hat” and the stock abbreviation was changed to “*ST Zuojiang”, but the stock price did not fall but rose. Wind data shows that the company’s stock price once soared to 299.8 yuan per share on July 14, 2023.
On the following evening of December 12, 2023, *ST Zuojiang prompted three risks in a reply to the Shenzhen Stock Exchange’s inquiry letter, and mentioned that some of the company’s DPU chip sales revenue could not be recognized. Subsequently, the company’s stock price took a sharp turn. In the four trading days from December 13 to December 18, 2023, Zuojiang Technology continued to fall by the limit. As of the close of trading on March 28, 2024, Zuojiang Technology’s stock price has fallen to 17.14 yuan/share, and its stock price has fallen by more than 94% compared with the highest level in July last year.
Supervision of research reports continues to become stricter
In recent years, the research and reporting business of securities firms has continued to receive regulatory focus. According to preliminary statistics from reporters, the securities industry received a total of 52 fines for securities firms’ research business in 2023. Judging from the reasons for punishment, there are three main typical problems in the research and reporting business of securities firms: first, the internal control systems of some companies are not updated and adjusted in a timely manner in accordance with the requirements of laws and regulations; second, the implementation effectiveness of the internal control systems of some companies is insufficient; third, specific research reports There was insufficient prudence in the production, and individual employees privately expressed their securities analysis opinions.
Against this background, regulatory authorities are also constantly strengthening their daily supervision of the publication of securities research reports. For example, the Securities Association of China has previously formulated and issued self-regulatory rules such as the “Code of Practice for Publishing Securities Research Reports”, “Code of Conduct for Securities Analysts”, and “Code for Securities Analysts to Participate in External Selection”, which clearly require securities analysts to produce and publish securities research reports. You should uphold a professional attitude, adopt rigorous research methods and analytical logic, and prudently propose research conclusions based on reasonable data and factual basis. In addition, securities companies are required to conduct quality control and compliance reviews before publishing securities research reports. Signed securities analysts should ensure that the sources of information are legal and compliant, the research methods are professional and prudent, and the analysis conclusions have reasonable basis.
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