The China Securities Regulatory Commission is taking strict measures to investigate and crackdown on the illegal activities of Tianfeng (601162.SH).

Recently, the China Securities Regulatory Commission (CSRC) imposed administrative penalties and pre-notification of market entry bans on Tianfeng Co., Ltd. (hereinafter referred to as Tianfeng) (601162.SH) for suspected illegal financing and violations of information disclosure laws and regulations for Wuhan Dangdai Technology Industry Group Co., Ltd. (hereinafter referred to as Dangdai Group). According to the investigation, from 2020 to 2022, Tianfeng illegally provided financing to the former largest shareholder Dangdai Group, failed to disclose related party transactions with Dangdai Group as required by regulations, and jointly engaged in related illegal activities with Dangdai Group, seriously violating securities laws and regulations. The Hubei Securities Regulatory Bureau intends to impose a maximum fine of 25 million RMB on Tianfeng and Dangdai Group collectively, a total fine of 34.8 million RMB on 9 responsible personnel, and a lifetime ban on securities market entry for Dangdai Group's actual controller Ai Luming, Tianfeng's then chairman Yu Lei, and then vice president and CFO Xu Xin. For the illegal activities of Tianfeng and related personnel in business operations, internal control compliance, etc., the Hubei Securities Regulatory Bureau intends to take administrative regulatory measures such as suspending related business operations, ordering disciplinary actions against relevant personnel, and regulatory discussions in accordance with the law. The Shanghai Stock Exchange intends to impose disciplinary actions in accordance with regulations on Tianfeng, Dangdai Group, and related responsible personnel. To effectively safeguard the legitimate rights and interests of investors, the securities regulatory authorities have continuously enhanced regulatory enforcement efficiency. The Hubei province has taken active actions, and the equity of Tianfeng held by Dangdai Group has been transferred to relevant enterprises in Hubei Province to ensure the operation of Tianfeng. The imposition of these penalties will help Tianfeng further solidify its corporate governance, improve compliance and risk management levels, and promote its stable operation. Corporate governance is the foundation of the high-quality development of listed companies, and compliance and risk control are the lifelines of securities companies' stable development. From the case of Tianfeng's violations, on the one hand, the abuse of shareholder rights by major shareholders, illegal use of securities company financing, and erosion of securities company interests are evident. On the other hand, the securities company has crossed the compliance line, cooperated with shareholders in illegal activities, and its nature is serious, thus it must be strictly punished according to the law. In the next step, the CSRC will continue to adhere to the principles of "pursuing the main culprit" and "attacking the accomplices", and will severely crack down on such illegal activities. At the same time, it will urge the securities industry to learn from this case, deeply draw lessons, comprehensively strengthen corporate governance and compliance and risk management, continue to promote industry culture construction, and truly adhere to the principles of "not crossing the line, not seeking only profits, not pursuing short-term gains, not departing from reality, not acting recklessly", and adhere to honesty and trustworthiness, seek profits with justice, be stable and prudent, adhere to righteousness, and innovate in accordance with the law and compliance. This article is compiled from the CSRC, GMTEight editor: Chen Wenfang.