57 Warning Letters And The Development Boundary Of Wealth Management: A Typical Case Of Guoyuan Securities "Show" Sales Of Zhongyuan And Anxin

Wang Yuanyuan, researcher of 21st Century Capital Research Institute

The development of wealth management is a definite transformation route for securities companies. The brilliant financial report data of securities companies in 2020 seems to prove the correctness of this direction.

However, under the brilliant performance of wealth management, it is some securities companies who aggressively and illegally sell wealth management products.

According to the statistics of the 21st Century Capital Research Institute, since 2021, the supervision has issued 57 warning letters on wealth management; Over the same period, the warning letter for investment banking business was only single digit.

After focusing on rectifying the compliance issues of investment banking business, is the supervision strengthening the investigation and treatment of problems at the wealth management end of the securities industry?

What specific development boundary strengthening signals do these regulatory letters reveal for securities compliance?

From the regulatory warning letter, what is the lack of wealth management status of some securities companies?

This issue of the 21st Century Institute of capital studies, from the perspective of regulatory trends, typical cases and future prospects, selects typical samples of compliance issues such as Guoyuan securities, Zhongyuan securities, and Anxin Securities for in-depth analysis. In the related cases, it is not only related to the lack of internal control under the impulse of performance, but also related to the absence of management's judgment on the trend of supervision. A series of cases have an important warning effect on the market.

Trend: 57 warning letters on wealth management

According to the complete statistics of the 21st Century Capital Research Institute, during the year (including some warning letters from late November to December 2020), there were 57 warning letters related to wealth management or the sale of financial products issued by local securities regulatory bureaus to securities companies.

The warning letter for investment banking business has only one digit.

Of the 57 warning letters mentioned above, 17 were for the company and 40 were for individual practitioners.

Among the warning letters delivered by the company, 12 are for the business departments of securities companies, 2 are for the branches of securities companies, 1 is for the subsidiaries of securities companies, and 2 are for the main body of securities companies.

The issuing objects of warning letters, from individuals, to business departments, and then to the main body of securities companies, means that the seriousness of the problem rises in turn.

Among them, the latest two warning letters are related to illegal consignment.

This trend is clearly no coincidence.

Taking the warning letter issued by Anhui securities regulatory bureau to Guoyuan securities on September 14 as an example, the regulatory focus covers all aspects of the development of securities companies, such as people, finance and materials.

For example, when it comes to "people", the compliance managers of Guoyuan securities do not have more than three years' work experience in relevant fields; the compliance managers assume the responsibilities of information technology, business management and other conflicts with compliance management; and the compliance management personnel are not fully equipped.

In the supervision of "finance", assessment tasks are assigned to the non marketing personnel in compliance management, risk monitoring, information technology, comprehensive and other non marketing posts. The personnel in the posts of compliance management, risk monitoring, information technology and comprehensive are engaged in marketing, customer account and other business activities, and receive performance commission. Information technology personnel assume the responsibilities of risk monitoring and compliance management.

According to the research of the 21st Century Capital Research Institute, because of the difficulty in obtaining evidence, the relevant clues often come from the internal report of enterprises or the supervision on-site inspection.

In addition, the management of public number and wechat group of Guoyuan securities was not in place, and the information released was not reviewed in accordance with the regulations; Some personnel engaged in selling financial products on a commission basis have not obtained relevant qualification; The monitoring video management of customer trading area is not in place; Part of the information submitted to the local agency of the CSRC is not accurate and timely, and part of the public information is not accurate.

This regulatory conclusion reflects the significant compliance problems of Guoyuan securities development industry, and the regulatory authorities conduct a detailed investigation on Guoyuan securities; This case is also a typical sample of warning securities companies to develop the industry.

On September 13, the warning letter of Chongqing Securities Regulatory Bureau to the exit of Southwest Securities showed a similar trend.

Liu Hua, an employee of Southwest Securities, provided investment advice to clients in February 2020 without being registered as a securities investment consultant in the Securities Industry Association during his tenure in the business department; At the same time, the employee sent the internal reference data of the business department to the customers, which reflected that the compliance management of the business department was not in place and the practice behavior of employees was not strictly standardized.

This regulatory nature will have an important impact on the follow-up supervision or judicial process to deal with the rights and interests disputes between Southwest Securities and relevant investors; The relevant cases were investigated and dealt with. The probability is that after the investor complained, the regulatory authorities promptly responded to the investigation.

Trend signals are not only from these two securities companies.

Typical 1: Guoyuan securities "show" in front of and behind the scenes

As early as two months ago, Guoyuan securities has received a warning letter from Shandong Securities Regulatory Bureau.

The core problem pointed out is similar to that of Anhui securities regulatory bureau, that is, Guoyuan securities is mobilizing all staff, including technical personnel, risk control personnel, compliance personnel, and comprehensive (administrative) personnel, in marketing, customer accounts and other businesses, and can also receive performance commission.

In July, Shandong Securities Regulatory Bureau only warned a business department of Guoyuan securities.

Until recently, Anhui Securities Regulatory Bureau issued a warning letter to the main body of the company, and pointed out the violations of Guoyuan securities one by one.

This also shows that, as a key financial institution under the jurisdiction of Anhui Province, Anhui securities regulatory bureau has not "protected the calf" at all.

However, the 21st Century Capital Research Institute learned from the investment bank personnel of Guoyuan Securities headquarters that at least the investment bank personnel did not receive similar marketing incentives.

It has to be said that in order to make a "good" transformation of wealth management, this wave of mobilization of Guoyuan securities is a bit of a show.

According to the understanding of the 21st Century Capital Research Institute, the regulatory authorities have strict requirements on the personnel allocation of securities companies such as compliance, technology and risk control, and some securities companies have the problem of "full staff sales". The disposition of Guoyuan securities shows the attitude of supervision on this issue.

During the visit of the 21st Century Capital Research Institute, some people in the industry mentioned the operational improvement of Guoyuan securities; However, dismantling its annual report data shows a different trend.

The performance improvement of Guoyuan securities is mainly reflected in three groups of data:

In 2020, Guoyuan securities realized a net profit of 1.370 billion yuan after deducting non-profit, with a year-on-year increase of 104.28%. For the second consecutive year, the growth rate of net profit attributable to the parent company was positive, which changed the declining trend that the growth rate of net profit was negative for three consecutive years from 2016 to 2018.

From 2017 to 2020, the income ranking of Guoyuan securities' agency sales of financial products has also changed greatly. From 2017 to 2020, the sub item ranked 61st, 28th, 61st and 36th respectively, and the corresponding income from sales of financial products by proxy was RMB 4.05 million, RMB 20.54 million, RMB 6.92 million and RMB 45.16 million.

In 2020, the total sales revenue of fund products sold by Guoyuan securities on a commission basis is 48.51 million yuan, while in 2019, this figure is only 7.69 million yuan.

According to the research of the 21st Century Capital Research Institute, from the perspective of the transformation to wealth management, all staff marketing can only form "good-looking" sales data for a while, but it can not form a long-term asset management relationship with customers.

From the data of Guoyuan securities asset management business, the transformation of its wealth management has not made achievements.

In 2020, the net income of asset management business of the company is 82.85 million yuan, but the figure is 118 million yuan in 2019, which shows a decrease in 2020.

And the individual and institutional customers of its asset management business are losing: in 2020, there are 21011 customers at the end of the period, but in 2019, the number is 27742, which also shows a decline.

Typical 2: serious problems in Zhongyuan and Anxin

The 21st Century Capital Research Institute found that the problems of Zhongyuan securities and Anxin securities are also more serious.

Zhongyuan securities and Guoyuan securities are the same situation, both belong to the securities regulatory bureau issued a warning letter directly to the main body of the company, which represents that this is no longer a personal or business department problem, but a problem of the company's main body.

On July 7, Henan Securities Regulatory Bureau issued a warning letter to Zhongyuan securities, saying that the company had a number of problems.

The internal control and compliance management of Zhongyuan securities Nanyang branch is not perfect. There are some problems, such as nonstandard management of seal, unregistered record of part of special seal for finance, and only signature of handling person and no signature of approval person for office seal.

In addition, the customer information management of Zhongyuan securities is not strict, some items in the customer information are not checked, the customer has not signed, the date is not accurate, and the service content and date are not specified in some investment advisory service agreements; The monitoring coverage of customer trading area is not complete, and the video recording is not complete; The management of blank voucher is not standardized; In the investment advisory business promotion, service provision link left mark management is not perfect and so on.

According to the understanding of the 21st Century Capital Research Institute, in June this year, dozens of investors signed the "asset entrusted management contract" with Nanyang branch of Zhongyuan securities, which was not recognized after Yang Qing, general manager of the business department, was detained in April, and the financing funds could not be cashed within the time limit, and the scale of funds involved may exceed 200 million yuan. The incident was reported by the media and then fermented.

Subsequently, the relevant personnel of Zhongyuan securities were detained information not reported to the regulatory authorities in time, and they were also called "compliance stampede".

Although Zhongyuan securities claimed that this was the behavior of the company's employees and that the company had reported the case to the public security organ, the securities regulatory bureau believed that the incident still reflected the problems in the company's internal management and internal control.

According to the data of 21st Century Capital Research Institute, after Zhongyuan securities was listed in early 2017, Zhongyuan securities began to receive regulatory letters from the CSRC. Since 2018, the amount of provision for asset impairment in financial statements accounted for more than 10% of the net profit of the parent company's owners in the latest accounting year, which had to be disclosed.

In the annual report of Zhongyuan securities in 2019, the Shanghai stock exchange received a letter from the Shanghai Stock Exchange on the supervision of credit. At that time, the Shanghai Stock Exchange raised eight questions, requiring Zhongyuan securities to make supplementary disclosure and explanation.

Although Anxin securities is not the main body of the company to receive the warning letter, it is the securities company with the highest warning function.

Since this year, the top three securities companies that received warning letters from companies or personnel are: China Galaxy (6), Jianghai securities (6) and Anxin securities (5).

China Galaxy and Jianghai securities have a large number of warning functions, because Chongqing Bureau and Heilongjiang Bureau have issued multiple warning letters to different objects on the same matter.

However, the business departments or branches of Anxin securities were continuously "named" by Tianjin Bureau, Shanghai Bureau and Guangdong Bureau.

On August 23, Tianjin Securities Regulatory Bureau issued a warning letter to Gu Ziping of Anxin securities Tianjin Branch, saying: during his term of office, he handled securities trading for clients;

On July 19, Shanghai Securities Regulatory Bureau issued a warning letter to Yang Ming, the business department of Anxin securities, Shanghai Yanggao South Road. It said that during his tenure, he took advantage of his position to participate in the financing process of some customers as a witness.

On May 8, Guangdong Securities Regulatory Bureau issued a warning letter to Zhou gumin, the person in charge of the securities business department of Anxin securities, Guangzhou Nansha Jingang Avenue, saying that during his term of office, he failed to implement the regulatory requirements of the CSRC on the real name account system, illegally introduced others to carry out entrusted financial management, and failed to fully reveal the risks to investors and make relevant commitments.

Earlier, on January 6, the Guangdong Securities Regulatory Bureau issued a warning letter to the Foshan Lecong securities business department of Anxin securities and Li Peichang, an employee of Anxin securities.

Prospect: banning sideline business and seizing network popularity

Regulators are already clear about new forms of compliance.

The 21st Century Capital Research Institute found that the regulatory letter of Chongqing Securities Regulatory Bureau has typical trend research significance.

Since the beginning of this year, Chongqing Securities Regulatory Bureau has issued 13 warning letters to securities companies and their employees. Judging from the results, it may be the most strictly controlled among all securities regulatory bureaus.

The warning letter issued by the Bureau was related to online celebrities and hit the "sidelines" of several securities practitioners.

On March 25, Chongqing Securities Regulatory Bureau issued a warning letter to Qin Yanhong of Huaxi Securities Co., Ltd., saying that during his tenure in the securities business department of Huaxi Securities Co., Ltd., Yulan Road, Wanzhou, Chongqing, he did not register as a securities investment consultant with the China Securities Association, and published investment suggestions on buying and selling specific securities through Sina Weibo, xiaohongshu app and other public media from June to November 2020.

A number of securities companies have also reported to the 21st century capital research institute that they are conducting internal self-examination on relevant situations.

In addition, Chongqing Securities Regulatory Bureau also issued warning letters to the Chongqing branches of Zhejiang securities and Shenwan Hongyuan securities companies and their responsible persons, pointing out that the responsible persons of the two securities companies were also working part-time in other profit-making institutions during their tenure.

Chongqing Securities Regulatory Bureau has a clear attitude, "no matter how comfortable life is, you can't do sideline work.".

In fact, Guangdong securities regulatory bureau also issued a warning letter to the securities practitioners' behavior of "engaging in sideline business".

On April 8, Guangdong Securities Regulatory Bureau issued a warning letter to Chen Quan of Minmetals securities, saying that he had engaged in other business activities during his tenure as the person in charge of Huaxia Road Securities Business Department of Minmetals Securities Co., Ltd. in violation of relevant regulations.