Within the year, 118 investment bank fines exceeded brokerages! And insurance agents recommended projects sent to court.

As we enter the fourth quarter, the regulatory storm on the investment banking business of securities firms continues to escalate. Data from Yidong shows that, as of now, a total of 118 penalties have been issued for investment banking businesses, including continuous supervision. Two major trends can be observed from a data perspective. First, investment banking has become a focus area for regulation. From the distribution of penalties across the industry, the total number of penalties for various types of securities firms has reached 313, with investment banking penalties accounting for 37.3%. This proportion has increased compared to 20.76% from the same period last year, indicating a significant strengthening of regulatory oversight over investment banking businesses this year, with the number of penalties showing a clear upward trend. Second, the scale of penalties for investment banking businesses has surpassed that of brokerages. Currently, there are 118 penalties for investment banking, 49 more than for brokerage business. In terms of penalty structure, there are 38 institutional penalties in the investment banking sector, and 80 penalties for individuals; compared to the same period last year, there are 16 fewer institutional penalties and 6 more individual penalties. Over the past two years, the number of individual penalties has consistently been the majority. Furthermore, in terms of exchange penalties, 42 investment banking penalties have been issued so far this year. Among them, the Shenzhen Stock Exchange issued 27, the Shanghai Stock Exchange issued 11, and the Beijing Stock Exchange issued 4. A recent case that has garnered market attention is Orient and related personnel being cautioned by the Beijing Stock Exchange for failing to diligently fulfill their duties in investment banking business. In terms of penalty situations, the issue of "inadequate due diligence" is particularly prominent, with many securities firms receiving penalties for not conducting comprehensive and thorough due diligence in the course of their investment banking activities. Overall, the regulation of investment banking business has shown a trend of "full chain accountability," with "dual penalties for a single case" gradually becoming a common practice in the industry. In terms of the extent of investment banking business operations and penalties this year, many cases have highlighted the significance and reference value of regulatory warnings compared to the past, further emphasizing the increasing focus on past violations by regulators. For example, a representative from Guoyuan has been transferred to court for allegedly committing two criminal offenses related to a sponsorship project he was responsible for, possibly the first case of its kind this year; Donghai Securities, Bohai Securities, and Soochow, among three securities firms, have been confiscated their related business income due to past violations in projects and also imposed fines. A total of 118 investment banking penalties have been issued so far this year. According to data from Yidong, as of October 14, since 2025, a total of 31 securities firms have received a total of 118 investment banking penalties. This is a decrease of 79 compared to the same period last year. Although the number has decreased compared to the previous year, the proportion of penalties in the overall industry punishment types has been on the rise, climbing from 20.76% to 37.3%. Looking at the list of securities firms penalized this year, there are a total of 31 firms, including Changjiang underwriting sponsorship, China Securities Co., Ltd., Haitong, CITIC SEC, Guorong Securities, Guoyuan, Donghai Securities, Guotai Haitong, Huatai Joint Securities, Minmetals Securities, Huatai, China Aviation Securities, National Investment Securities, Huafu Securities, Minsheng Securities, Orient, Shenwan Hongyuan Group underwriting sponsorship, Founder underwriting sponsorship, Zheshang, ChinaLin, Debon Securities, Dongxing, Sinolink, CICC, Zhongtai, Southwest, Bohai Securities, CMSC, Huaan, Huaying Securities, Soochow, among others, receiving investment banking penalties. In terms of the distribution of penalty numbers, CITIC SEC tops the list with 10 penalties, followed by Haitong (now Guotai Haitong), China Securities Co., Ltd., CICC, Shenwan Hongyuan Group underwriting sponsorship, Guoyuan, Minmetals Securities, and other institutions. Overall, among the 31 securities firms penalized for investment banking activities, 18 have faced "dual penalties," accounting for over half. It is worth noting that due to some securities firms' involvement in sponsorship projects occurring before the completion of merger transactions, the statistics of penalties are based on the corresponding securities firm names at the time of the sponsorship projects, ensuring the accuracy of the data traceability. Investment banking penalties exhibit new characteristics. Since 2025, investment banking penalties at securities firms have gradually shown a series of new characteristics. First, comprehensive punishments across the chain are becoming the norm. Unlike in the past, regulatory authorities this year are no longer limiting their penalties for securities firms' investment banking activities to individual projects or specific stages but are systematically covering the entire business process. From insufficient execution of quality control systems and non-standard internal control processes to inadequate due diligence and irregular project fees, various reasons for penalties have exposed systematic flaws in some securities firms' operations in investment banking, indicating a significant increase in regulatory penetration into business processes. Second, the "dual-penalty" mechanism is being fully implemented. Currently, regulators not only punish the involved securities firms but also hold key executives, quality control officers, project leaders, and other "critical few" responsible individuals accountable simultaneously. Through the "dual-penalty" model, regulatory authorities have further strengthened the dual responsibility awareness of institutions and employees, promoting the transmission of compliance responsibilities from the institutional level to the personal level. Third, the intensity of tracing past violations has increased. This year, regulatory authorities have begun holding securities firms accountable for violations that occurred years ago, such as the first investment banking penalty issued by the China Securities Regulatory Commission this year pointing directly to two historical violations by Soochow involving the non-public issuance of Gome Communications 5 years ago and the improper handling of Zixin Pharmaceuticals' 11-year-old stock issuance project. This measure fully demonstrates the determination of regulators to enforce the principle of "accountability for responsibility" rigorously, indicating that violations, regardless of when they occurred, will be dealt with according to the law. Looking at the total of 118 investment banking penalties issued this year, several cases have garnered industry attention due to their significant penalty severity. For example, Jia Chao and Chen Jinke from Guotai Haitong, Wu Xinghui and Lei Chen from Shenwan Hongyuan Group underwriting sponsorship, Cheng Chao and Song Lezhen from Sinolink, Ma Zhitao and Xu Ming from Guoyuan, and 8 other representatives received penalties for inadequate due diligence, restricting them from signing issuance and listing application documents and information disclosure files for a certain period, directly affecting their professional qualifications. In addition, the penalties imposed on Donghai Securities, Bohai Securities, and Soochow are also noteworthy. These three institutions have not only had their related business income confiscated but have also been fined along with the company and relevant personnel. Investment banking penalties are deeply affecting securities firms and employees. Against the backdrop of increasing regulatory pressure and the guidance for securities firms to transition to high-quality development, the impact of business penalties continues to extend, forming a profound constraint on the reputation of intermediary institutions, business ratings, and the professional development of employees. In September this year, the China Securities Regulatory Commission announced the results of the 2025 securities company classification evaluation to securities firms. A total of 107 participating companies (including parent and subsidiary companies) were evaluated, marking the first evaluation since the revision of the Securities Company Classification Evaluation Regulations in August 2025. This year's classification evaluation will continue to focus on compliance as the core deduction point, including all entities such as securities companies, branches, various domestic and foreign subsidiaries, directors and senior management, main business personnel, as well as administrative penalties, investigations, regulatory measures, self-regulatory measures, and other situations fully included in the evaluation scope. Looking at the distribution of penalty types in business activities, the concentration of penalties has traditionally been in brokerage business activities, but this pattern has changed significantly since 2025. According to data from Yidong, this year's investment banking penalties show two major features: a significant increase compared to the same period last year and, as of now, the number of investment banking penalties has surpassed brokerage activities, becoming the most penalized area among various businesses for securities firms. With the increasing number of investment banking penalties, the negative impact on securities firms' classification evaluation results continues to deepen, further compelling securities firms to strengthen compliance management in the investment banking sector. In addition to affecting institutional ratings, the linkage between penalties and classification evaluations also imposes stronger constraints on the professional development of employees, especially in the field of representatives. With the enhancement of the negative assessment disclosure mechanism for representatives, the China Securities Industry Association issued a notice amending the "Securities Company Sponsorship Business Rules" in September 2024, adding a new classification list D (suspension of business) for representatives, defining stricter red lines for representative practice. As of now, 14 representatives from 9 securities firms have been included in the D-class list. Since 2025, representatives from many securities firms, such as Soochow, GF SEC, Caixin Securities, Sinolink, Donghai Securities, have been included in this list. Most importantly, regardless of whether representatives switch registration institutions in the future, negative records will continue to be tracked, extending the requirement of "declaration is responsibility" to specific individual practices and pushing representatives to enhance their sense of duty. This article was originally published by "CaiLian News" and written by Zhao Xinrui; GMTEight editorial by Feng Qiuyi.