On December 8, 2025, First Capital Securities Co., Ltd. (002797), the lead underwriter and sponsor of Hongda Xingye Co., Ltd.’s (002002) 2019 convertible bonds, announced that its wholly-owned subsidiary, First Capital Investment Banking, received a prior notice of administrative penalties from the Jiangsu Regulatory Bureau of the China Securities Regulatory Commission (CSRC).
The key points of the notice include allegations that First Capital Investment Banking failed to fulfill its due diligence obligations during the post-issuance supervision of Hongda Xingye’s 2019 convertible bonds. Specifically, the subsidiary did not adequately verify the use and repayment of raised funds, failed to issue proper review opinions, and neglected reporting duties, leading to false records in supervisory documents. The Jiangsu Bureau proposed penalties, including corrective orders, warnings, confiscation of underwriting revenue, and fines for the subsidiary and its responsible representatives.
Earlier, on November 1, 2025, First Capital Securities disclosed that its subsidiary was under CSRC investigation.
Hongda Xingye (formerly Jiangsu Qionghua, delisted as R Hongda 1, 400207) had previously been penalized by the CSRC’s Jiangsu Bureau on June 27, 2025, for multiple violations: 1. **Misuse of Raised Funds**: From December 31, 2019, to July 23, 2020, the company diverted ¥1.69 billion of 2019 bond proceeds without authorization, primarily to its controlling shareholder, Hongda Group, and affiliates. 2. **False Disclosures**: Annual reports (2019–2022), semi-annual reports, and special reports on fund usage contained misrepresentations, including inflated revenue, understated costs, and falsified profit data. 3. **Untimely Disclosures**: The company failed to promptly report major litigation, arbitration, and guarantee agreements.
Penalties for Hongda Xingye, its actual controller Zhou Yifeng, and other responsible parties included corrective orders, warnings, and fines.
**Investor Compensation Eligibility**: Under China’s Securities Law and judicial interpretations, investors harmed by fraudulent disclosures may claim compensation for losses, including price differentials, commissions, stamp duties, and interest. Lawyer Song Yixin of Shanghai Hanlian Law Firm is coordinating claims for eligible investors who purchased Hongda Xingye securities between December 31, 2019, and September 22, 2023, and held or sold them after September 23, 2023.
**Key Notes for Claimants**: 1. Final eligibility depends on CSRC penalties and court rulings. 2. Direct lawsuits without administrative penalties carry higher risks. 3. Delisting or bankruptcy may affect case timelines but not the right to sue. 4. Required documents include ID copies, securities account confirmations, and transaction records.
(Disclaimer: This article reflects legal analysis and does not constitute investment advice.)
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