From 9 Billion RMB Compliance Violations to Business Pressure, How Will Tianfeng Securities Break the Deadlock?

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(Source: Meicai.com)

After settling old accounts, the company’s fundamentals remain under scrutiny.

Text / Daily Financial Report Nan Li

Recently, Tianfeng Securities (rights protection) has issued multiple announcements, disclosing administrative penalties from the securities regulatory bureaus of Hubei and Fujian. Due to involving over 9 billion yuan in illegal transactions with the former largest shareholder, Contemporary Group, the company and its senior executives were fined, barred from the market, and several businesses suspended, exposing deep-rooted issues in corporate governance and internal control compliance.

Although the company has completed a change of controlling shareholder, with Hubei Hongtai Group taking over and gradually pushing forward reforms, this penalty is not only a resolution of past issues but also puts Tianfeng Securities’ business foundation under the spotlight.

For investors, beyond the fines themselves, a more important question is: after shedding its historical baggage, what is the true state of this brokerage’s business foundation, and can it really emerge from the shadow?

Over 9 billion yuan in financing for original shareholders, multiple executives held accountable

The core of the regulatory penalties against Tianfeng Securities centers on its covert and massive illegal transactions with the former largest shareholder, Contemporary Group. Investigations show that between 2020 and 2022, at the request of Contemporary Group, Tianfeng Securities used its own funds to provide financing totaling 5.502 billion yuan through subsidiaries, private equity fund bond purchases, and proprietary reverse repurchase agreements.

More seriously, the company also used client assets, channeling over 3 billion yuan to Contemporary Group via trust plan subscriptions and primary market bond transactions. Additionally, it provided financial support to related parties of other shareholders, including transferring 500 million yuan to Guanggu Financial Leasing as an equity earnest money, and 300 million yuan to related parties of Wenfeng Co., Ltd.

These illegal operations totaled over 9 billion yuan, accounting for more than 36% of the company’s net assets at the end of 2022, directly violating the Securities Law’s prohibition on securities companies providing financing to shareholders and related parties. Even more seriously, these large related-party transactions were not disclosed as required, leading to significant omissions in the company’s annual reports from 2020 to 2022.

Beyond the core issues, Tianfeng Securities also has multiple internal control and compliance gaps: including delayed disclosure obligations after acquiring Yong’an Forest Industry Shares through judicial rulings; irregular private placement business; and weak control over subsidiaries, exposing significant flaws in its internal control system.

Regulators not only imposed hefty fines but also held responsible personnel accountable. The Hubei Securities Regulatory Bureau fined Tianfeng Securities 15 million yuan; Yu Lei and Xu Xin, who knew about and led the violations, were fined 6 million yuan each and banned from securities market activities for life; senior executives Wang Linjing, Zhai Chenxi, and others involved in violations or failing to fulfill disclosure duties were fined over 3 million yuan, with Wang Linjing fined a total of 4.4 million yuan.

In addition to fines and market bans, several business operations were restricted: the Hubei Securities Regulatory Bureau suspended its private fund distribution business for two years; its subsidiary Tianfeng Tianrui was suspended from establishing new private funds for one year. The Shanghai Stock Exchange also publicly reprimanded the company and its senior executives, declaring Yu Lei and Xu Xin permanently unfit to serve as directors or senior managers of securities issuers.

Old wounds healing, but pressure remains

The series of violations by Tianfeng Securities stem from improper control by the former private major shareholder, Contemporary Group. After the debt crisis in 2022, risks from the group’s influence on Tianfeng Securities gradually surfaced. In 2023, Hubei Hongtai Group, a state-owned enterprise, officially took control, becoming the new controlling shareholder, with Contemporary Group fully exiting.

However, the risks left by the major shareholder still hang like a “Damocles sword” over the company. From being investigated by the CSRC in November 2025 to the penalties finalized in March 2026, the state-owned controlling shareholder has been pushing the company to rebuild its compliance and risk control systems. Currently, most of the illegal financing funds, except for a small remaining amount, have been recovered.

Meanwhile, Hongtai Group continues to provide capital support, subscribing fully to a 4 billion yuan private placement in 2025, further consolidating its state-owned controlling position.

Yet Tianfeng Securities still faces dual pressures of performance and market trust. The company’s performance has been volatile in recent years: a net loss of 1.503 billion yuan in 2022, another loss of 29.71 million yuan in 2024. Although it is expected to turn profitable in 2025 with a net profit attributable to parent of 125 million to 185 million yuan, its profitability mainly depends on investment income, and the stability of its core business remains to be verified.

Despite claiming to have fully completed reforms, this penalty is not an indication of new risks but the end of old problems. However, the stock price has long been low within the brokerage sector, and after the penalties, the market shows a mix of “all negative news has been priced in” expectations and cautious trust.

Traditional business under pressure, innovation tracks hindered

Looking at its business structure, Tianfeng Securities has been adjusting its layout in recent years, but the competitiveness of its core lines still needs to be tested.

Wealth management remains the company’s foundation. As of mid-2025, Tianfeng Securities has 29 branches and 77 business departments, with a total of 1.026 billion yuan in distributed financial products, down over 30% year-on-year.

While private fund distribution accounts for less than 1% of total revenue, it is crucial for converting and retaining high-net-worth clients. The two-year suspension means the company will temporarily miss out on this key wealth management track.

In investment banking, the number of equity financing projects in the first half of 2025 was limited. Although bond underwriting has grown, project pipeline and team stability face challenges.

Notably, Tianfeng Securities once showed strong research capabilities, ranking in the top 15 for research commission income in 2024. However, since 2025, several key analysts have left, affecting the stability of the research team.

Asset management mainly operates through its private subsidiary Tianfeng Tianrui. By mid-2025, it managed 22 registered funds with a scale of about 3 billion yuan, but in the first half of 2025, this business recorded a net loss of over 70 million yuan. The suspension of new product launches for one year will limit fundraising capacity in the short term.

The penalties do not mean Tianfeng Securities can relax. Restoring trust takes time and requires solid performance support. Whether Tianfeng Securities can rebuild its core competitiveness within a compliant framework will be key to truly overcoming the shadow.