By Li Hongmei
Xiao Gang, who became chairman of the China Securities Regulatory Commission in March, has already been cracking the whip on illegal cases and investigating fraud within his first 80 days since taking office, the Chinese-language Chengdu Business Daily reports.
Xiao's moves "will help regulate the market, give warnings to fake listings, eliminate the market's unreasonable practices - all will benefit the market in the long run," said Zhang Gang, an analyst at Central China Securities.
Xiao gives the impression of a low-profile style, but he has quickly moved to investigate cases of possible fraud and severely punished people whose dodgy dealings have resulted in massive losses for stock investors. Analysts praised Xiao's moves to protect investors and clean up the market, the report said.
Since May, the regulator has investigated 12 companies involved in fraud, with the benchmark case being the punishment of Wanfu Biotechnology for issuing false financial reports, in which the punishment also extended to include its sponsor, Ping An Securities, and its accountants and lawyers. The regulator confiscated Ping An's sponsor money from Wanfu worth 25.55 million yuan (US$4.16 million), fined it double this amount and demanded Ping An offer a 300 million yuan (US$49 million) fund to compensate investors. The regulator also suspended Ping An's sponsor qualification for three months, laying down the most severe punishment since the sponsorship system was introduced in 2004, the report said.
On May 17, the regulatory commission announced the names of eight companies suspected of violating listing rules, including Xi'an Longi Silicon Materials Corp and Kingsun LED Lights.
The regulator's stricter probes have effectively helped ease the jam of IPOs applications, as it has reduced the queue of applicants from 851 to 666 and forced many companies to put off their plans to go public. The probes will help raise the bar for companies seeking to list and block less qualified enterprises, analysts said.
The regulator is facing huge pressure to reopen IPO reviews and it is trying to convey to the market that those still in contention are reliable. This way market confidence can improve and the regulator can smoothly get back to reviewing and approving IPO candidates in due course, Zhang said.
Analysts said that overall the regulator's penalties are still comparatively light and probably won't have a major effect on the market. It remains to be seen whether the new broom Xiao Gang and his team will ultimately result in the formation of a mechanism with long-term positive effects.
