Zhejiang Securities Regulatory Bureau Issues Multiple Fines; Zhejiang Commercial Securities Fund Custody Business Violations on Multiple Fronts; Caitong Securities Employee Penalties Involve Bond Business

Cailian Press, March 15 — (Reporter Chen Junlan) The Zhejiang Securities Regulatory Bureau has recently issued multiple fines, directly pointing to issues in compliance standards among securities firms’ practitioners and institutional compliance management gaps.

Among them, Zheshang Securities was ordered to correct multiple problems, including insufficient experience among core custody personnel, non-independent office locations, and inadequate compliance management of subsidiaries. Caixin Securities was subject to regulatory talks after two employees, Peng Yu and Yang Yu, failed to strictly follow professional standards.

This regulatory action is not an isolated incident. According to Yidong Data, this is the second time since 2026 that Zheshang Securities and Caixin Securities have received penalties from regulators, indicating a high level of regulatory concern over internal control quality in securities firms.

Multiple violations in custody business, lack of compliance in subsidiaries, Zheshang Securities ordered to correct

The penalties reveal systemic weaknesses in Zheshang Securities’ business structure and internal control system. Investigations found multiple violations in fund custody operations and subsidiary compliance management.

First, in core custody operations, Zheshang Securities crossed several red lines. Regulators pointed out that some key personnel in core custody roles lack at least two years of relevant experience. According to Article 8, Item 3 of the “Regulations on the Administration of Securities Investment Fund Custody Business,” senior management and other staff in fund custody departments must have appropriate experience, which is a basic requirement to ensure professionalism and security in custody services. Additionally, Zheshang Securities’ custody office is not independently located, violating the physical separation requirement in Article 10, Item 2 of the same regulations.

More seriously, deficiencies were also found at the software level. Regulators discovered that their standards and procedures for investment supervision are incomplete, and that the conduct of custody staff and fund management are not well-regulated. Investment supervision is a core responsibility of custodians; lacking proper processes and standards may impair their ability to effectively oversee fund managers’ investment activities, potentially harming fund shareholders’ interests.

Beyond direct custody violations, Zheshang Securities also exhibits a “vacuum” in subsidiary oversight. The Zhejiang Securities Regulatory Bureau pointed out that the firm’s compliance management of asset management subsidiaries, private equity fund subsidiaries, and alternative investment subsidiaries is inadequate.

This violation breaches Article 3 of the “Regulations on Compliance Management of Securities Companies and Securities Investment Fund Management Companies.” The article requires securities and fund management institutions to establish comprehensive compliance systems covering all business areas and staff, and to bear primary responsibility for subsidiary compliance management. As the industry diversifies, asset management, private equity, and alternative investment subsidiaries have become key profit sources but also high-risk areas. If the parent company cannot effectively enforce compliance across subsidiaries, risks may accumulate and spill over.

Based on these facts, the Zhejiang Securities Regulatory Bureau has decided to impose an administrative correction order on Zheshang Securities and record the case in the securities and futures market integrity archive.

Violation of professional standards, Caixin Securities employees face regulatory talks

According to the decision issued by the Zhejiang Securities Regulatory Bureau, two employees of Caixin Securities, Peng Yu and Yang Yu, failed to strictly adhere to professional standards during their employment.

The regulator determined that their conduct violated Article 6, Paragraph 1 of the “Measures for the Administration of Corporate Bond Issuance and Trading.” This article clearly states that issuers, their controlling shareholders, actual controllers, directors, supervisors, senior managers, as well as underwriters, trustees, credit rating agencies, accounting firms, law firms, and related personnel must act diligently, strictly follow professional standards and regulatory rules, and fulfill their obligations as required.

While the decision does not specify the exact violations committed by Peng Yu and Yang Yu, the characterization of “not strictly following professional standards” generally refers to procedural lapses, insufficient due diligence, or inadequate disclosure during bond underwriting, trustee management, or investigation processes. In the current regulatory environment emphasizing “zero tolerance” for violations in the bond market, the professional quality of practitioners directly impacts market fairness and efficiency.

The Zhejiang Securities Regulatory Bureau has decided to place Peng Yu and Yang Yu under regulatory talks, record the situation in the securities and futures market integrity archive, and require both to report to the bureau within a specified timeframe.

Strengthening “gatekeeper” responsibilities to restore industry integrity

The concentrated disclosure of these three penalties coincides with regulatory guidance on the development priorities for the securities industry in 2026. On March 6, during the 14th National People’s Congress Fourth Session, CSRC Chair Wu Qing clearly outlined the regulatory focus.

Wu Qing emphasized guiding industry institutions to focus on their core businesses and develop in a regulated manner. For securities firms, this includes revising and implementing new regulations, supporting leading firms to grow stronger, and encouraging small and medium-sized firms to develop with differentiation, thereby improving governance, strengthening internal controls, enhancing services, and pursuing niche development.

Crucially, Wu Qing highlighted the importance of reinforcing the “gatekeeper” role of intermediaries, ensuring strict control over the issuance and listing process to prevent “sick applications” and herd behavior. Additionally, he stressed the need to strengthen supervision of sponsor representatives and accelerate the development of mechanisms to detect financial fraud clues.