In the news: CSRC crackdown, VIE structure and Chengdu's rise

June 07, 2013 | BY

clpstaff &clp articles

The CSRC has punished two brokerage firms for fraud and the question of whether the VIE structure is valid has reappeared. Chengdu is now home to 31 more Fortune 500 companies, securing its place as China's new foreign investment destination

CSRC penalises brokerages for fraud

The country's top regulator the China Securities and Regulatory Commission (CSRC) has penalised Minsheng Securities and Nanjing Securities for failed due diligence during initial public offerings (IPOs). Minsheng was fined Rmb2 million ($326,000) for Shanxi Tianneng Technology's IPO in 2011 and Nanjing received a warning for Guangdong Xindadi Biotechnology's IPO last year. According to the CSRC, both securities outfits provided falsified information in their offering documents.

This is a welcome move from the CSRC. Market participants are familiar with China's backlog of IPOs since the regulator froze all listings last year. Since then, the number of companies waiting to list has dropped by 200, as many fear their accounting standards are not up to scratch. The move is also good news for Xiao Gang, who took over from Guo Shuqing, as chairman of the CSRC in March of this year. The Regulator has committed to removing fraud and standardising practices – could this be the start of more crackdowns to come?

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