China’s regulators are pushing for sterner penalties for fraudulence in bond issuance at home, according to a report by the China Securities Journal today.
In its recent ruling for a case on bond issuance fraud, a court in Shanghai dealt harsh penalties not only to the bond issuers and their senior managers but also to the intermediary agencies.
These agencies included a securities dealer and an auditing firm, which fabricated financial statements and other related documents in the provision of their services.
This ruling, together with other precedents, marked a milestone in the regulations of the domestic bond market. They would ensure the integrity of the disclosed information and encourage intermediary agencies to duly serve their role as the “gatekeeper” on the securities market, as commented by an expert.
Aside from the judicial penalties, supervisory practices were also tightened for the bond markets of domestic securities exchanges.
The bond issuance review had been strict. From 2015 until 2017, 1,327 bond issuance applications, or 26 percent of all such requests, had been rejected, terminated, or suspended by the China Securities Regulatory Commission (CSRC).
The bond issuers were under closer supervisions during and after their bond issuance. In the past three years, the CSRC had imposed restrictions on a total of 82 bond issuers, which were subsequently banned from the private placement of bonds for one year. Also, law enforcement was strengthened.
Constant supervisions of corporate bond issuers would remain a long-term and persistent priority for the regulators, which would facilitate the sound development of the bond market, said the above expert.
Efforts should be made to put the intermediary agencies under stricter supervisions so that they can serve to prevent irregularities in the bond market, said Mr. Guo Li, a law professor at the Peking University.
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