The Securities Regulatory Commission applied the administrative enforcement party commitment system to receive timely and efficient compensation for investor losses in the amethyst storage case

Zhitong Finance App learned that on December 29, 2023, the China Securities Regulatory Commission and Guangdong Amethyst Information Storage Technology Co., Ltd. signed a commitment approval agreement (Securities Regulatory Commitment Notice [2023] No. 1, 2, 3, 4), including CITIC Construction Investment Securities Co., Ltd., Grant Thornton Certified Public Accountants (Special General Partnership), Rongcheng Certified Public Accountants (Special General Partnership), and Guangdong Hengyi Law Firm (hereinafter collectively referred to as 4 intermediaries) in fraudulent issuance and information disclosure violations. According to the agreement, the four intermediaries paid a total commitment of about 1,275 million yuan. In addition to the initial pre-payment of about 1,086 million yuan of investor losses, they are also required to pay a commitment of about 189 million yuan to the commitment management agency China Securities Investor Protection Fund Co., Ltd. (hereinafter referred to as the insured fund company), including about 11.79 million yuan of unpaid investor losses, and carried out self-inspection and rectification according to requirements, seriously investigate the responsibilities of relevant personnel and submit written rectification reports.

The full text is as follows:

The Securities Regulatory Commission applied a commitment system for administrative enforcement parties, and investors' losses in the amethyst storage case were promptly and efficiently compensated

On December 29, 2023, the China Securities Regulatory Commission and Guangdong Amethyst Information Storage Technology Co., Ltd. signed a commitment approval agreement (Securities Regulatory Commitment Notice [2023] No. 1, 2, 3, 4), including CITIC Construction Investment Securities Co., Ltd., Grant Thornton Certified Public Accountants (Special General Partnership), Rongcheng Certified Public Accountants (Special General Partnership), and Guangdong Hengyi Law Firm (hereinafter collectively referred to as the 4 intermediaries), which are suspected of not being diligent and conscientious due to fraudulent issuance and information disclosure violations. According to the agreement, the four intermediaries paid a total commitment of about 1,275 million yuan. In addition to the initial pre-payment of about 1,086 million yuan of investor losses, they are also required to pay a commitment of about 189 million yuan to the commitment management agency China Securities Investor Protection Fund Co., Ltd. (hereinafter referred to as the insured fund company), including about 11.79 million yuan of unpaid investor losses, and carried out self-inspection and rectification according to requirements, seriously investigate the responsibilities of relevant personnel and submit written rectification reports.

Up to now, the four intermediaries have paid their commitments to the insured fund companies and carried out self-inspection and rectification, and the China Securities Regulatory Commission has carried out on-site inspection and acceptance. Since the four intermediaries have already fulfilled their commitment and approval agreements, the China Securities Regulatory Commission legally terminated the investigation of the above matters by the four intermediaries on August 30, 2024, according to the provisions of Article 171 of the “Securities Law” and “Implementation Measures of the Party Commitment System for the Administration of Securities and Futures” (Order No. 749 of the State Council).

As the first case to apply the commitment system for administrative law enforcement parties after the revision of the Securities Law in 2019, this case adheres to the people-centered approach, protects the legitimate rights and interests of investors with high efficiency, and fully demonstrates the comprehensive role of the administrative enforcement party commitment system in relief, punishment, education, and resolution of market conflicts and disputes. In this case, the parties involved were urged to actively pay the investors' losses through an administrative enforcement commitment system. The intermediary agency compensated 16,986 investors (97.22% of the total number of damaged persons) of about 1,086 billion yuan (98.93% of the total loss amount) within two months through an advance payment procedure. Subsequently, the insured fund company will also issue relevant announcements in accordance with the regulations. Eligible investors who have not claimed compensation in the early advance payment can continue to claim corresponding commitment compensation from the insured fund company. While applying the administrative law enforcement parties' commitment system to protect the legitimate rights and interests of investors, the four intermediaries also paid a total economic cost of about 1,275 billion yuan (more than 10 times their business revenue) and carried out rectification according to requirements.

In the next step, the China Securities Regulatory Commission will resolutely implement the spirit of the Central Financial Work Conference and the requirements of the new “National Nine Rules”, ensure that supervision is “prickly” and angular, continue to step up the crackdown on capital market violations, strengthen the responsibility of intermediaries, implement the concept of finance for the people, and do a good job of administrative enforcement parties in accordance with the law and regulations to more effectively protect the legitimate rights and interests of investors, especially small and medium-sized investors, and promote the high-quality development of the capital market.

This article was selected from the “Securities Regulatory Commission”; Zhitong Finance Editor: Huang Xiaodong.