Tianfeng Securities faces a maximum fine of 25 million yuan, with three individuals banned from the market for life

China Securities Regulatory Commission Announces Administrative Penalties and Market Ban Notice for Tianfeng Securities and Associated Parties

On February 13, the China Securities Regulatory Commission (CSRC) announced that it has issued an administrative penalty and market ban notice regarding Tianfeng Securities Co., Ltd. for providing illegal financing and information disclosure violations to Wuhan Contemporary Technology Industry Group Co., Ltd.

According to investigations, between 2020 and 2022, Tianfeng Securities illegally provided financing to the former largest shareholder, Contemporary Group, and failed to disclose related-party transactions with Contemporary Group as required. Contemporary Group and Tianfeng Securities jointly engaged in related illegal activities, severely violating securities laws and regulations. The Hubei Securities Regulatory Bureau plans to impose a maximum fine of 25 million yuan on Tianfeng Securities and Contemporary Group, and a total fine of 34.8 million yuan on nine responsible personnel. The actual controller of Contemporary Group, Ai Luming, Tianfeng Securities’ then-chairman Yu Lei, and then vice president and CFO Xu Xin will face lifelong securities market bans. For illegal activities related to business operations and internal control compliance by Tianfeng Securities and involved personnel, the Hubei Securities Regulatory Bureau plans to take administrative measures such as suspending relevant business activities, ordering disciplinary actions against responsible personnel, and regulatory interviews. The Shanghai Stock Exchange intends to impose maximum disciplinary sanctions on Tianfeng Securities, Contemporary Group, and relevant responsible personnel.

Previously, to effectively safeguard investors’ legitimate rights and interests, securities regulatory authorities have continuously enhanced enforcement efficiency. The Hubei Province actively responded, and the equity held by Contemporary Group in Tianfeng Securities has been transferred to relevant enterprises in Hubei Province, ensuring the company’s operations. The implementation of this penalty will help Tianfeng Securities further strengthen corporate governance, improve compliance and risk management levels, and promote stable operation.

The CSRC stated that corporate governance is the foundation of high-quality listed company development, and compliance and risk control are vital for the steady growth of securities firms. From the case of Tianfeng Securities’ violations, on one hand, major shareholders abuse shareholder rights, illegally utilize securities firms for financing, and erode securities firms’ interests; on the other hand, securities firms breach compliance bottom lines and cooperate with shareholder illegal activities. Such conduct is severe and must be punished strictly according to law.

The CSRC emphasized that moving forward, it will continue to pursue both the primary offenders and their accomplices, strictly crack down on such violations. Meanwhile, it urges the securities industry to learn from these cases, deeply reflect on lessons, strengthen corporate governance and compliance risk management comprehensively, promote industry culture construction, and ensure adherence to bottom lines, avoid greed for profit, avoid rushing for quick gains, avoid detachment from reality, and avoid misconduct. The industry should uphold honesty and trustworthiness, seek benefits through integrity, operate prudently, uphold principles, and comply with laws and regulations.

Source: China Securities Journal