The regulator has conducted health checks on fund subsidiaries and found that a minority of them have “blindly developed high-risk businesses, with weak risk control and compliance management and short-term incentives”, the CSRC said in a regular briefing on Friday.
Some also “blindly expand business scale and fail to have capital restraints,” it noted.
On the five rulings, two are related to market manipulation, one is insider trading, and the other concerns a violation of law by a private fundraising company, Guangzhou Sui Fu CCI Capital.
Sui Fu sold RMB 36.2m worth of shares, or 1.67% stake of a listed company in the secondary market during September 2015.
But after the collapse of A-shares in July, the CSRC had announced that any major shareholders, or those who hold 5% or more stake, could not sell any shares in the six months starting July 8.
Sui Fu was given a warning with RMB 30,000 fine, while its chairman and compliance officer were also warned and fined for RMB 20,000 and RMB 10,000 respectively.
Meanwhile, the Asset Management Industry Association of China added seven more private fundraising companies to its “lost contact” list, which is a list of Chinese asset managers it is no longer able to contact. One of them, Wangzhou Fortune, was in the midst of a scandal as chairman Yang Weiguo had vanished for ten days and was accused of stealing RMB 1bn from the firm. He showed up afterwards and was probed by the police.
So far, 31 problematic firms are on the list, while 17 of them had their licenses revoked.
Mainland media reported last week that the CSRC is seeking stricter standards for fund subsidiaries, which have grown assets to RMB 9.84bn ($1.5bn) as of March, the CSRC said. The various subsidairies belong to 79 fund houses.
The number of registered private fundraising companies has dropped by about 10% to 23,880 in April compared to a month earlier, after the regulators stepped up the crackdown in the asset management sector, particularly in private asset management and peer-to-peer (P2P) lending.
