CSRC intensifies monitoring efforts over IPOs

Updated: 2013-01-28 16:51


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BEIJING - China's securities regulator has begun to act on violations that occurred during initial public offerings (IPOs) last year, with more sponsors being penalized for dereliction of duty.

Since September 2012, the China Securities Regulatory Commission (CSRC) has sent eight warning letters to six brokerage firms that failed to disclose information in a timely manner after their newly-listed clients reported profit plunges, Monday's China Securities Journal reported.

Three letters were sent to CITIC Securities, Guosen Securities and Everbright Securities in January, the report said.

According to relevant regulations, the CSRC can impose punishments on sponsors and issuers if listed companies post year-on-year profit declines of 50 percent or greater in the same year that their shares became available for trading on the stock market.

The penalties range from a 3-to-12-month ban on sponsors and issuers' IPO business to the revocation of sponsorship qualifications.

The brokerages involved may be downgraded and their investor protection fund will be increased significantly. The fund is compulsory for all Chinese securities brokerages.

The cost of the fund normally varies between 0.5 percent and 5 percent of the company's annual revenues.

The intensified monitoring efforts are intended to punish sponsors who spice up companies' financial performance to facilitate the process of going public, which may result in a marked profit slump in their annual reports after an IPO is issued.

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