First Capital Securities Co., Ltd. disclosed that its subsidiary, First Capital Investment Banking, has been placed under investigation by the China Securities Regulatory Commission (CSRC) for alleged failure to fulfill continuous supervision responsibilities in the 2019 convertible bond project of Hongda Xingye Co., Ltd.
According to the announcement, the CSRC issued a notice of investigation (Case No. 0102025023) on October 29, 2025, citing violations of the Securities Law and the Administrative Penalty Law. First Capital Investment Banking, a wholly-owned subsidiary specializing in investment banking services including equity/credit financing, M&A, and financial advisory, is accused of inadequate diligence in its supervisory role.
Regulatory scrutiny has intensified for First Capital Securities and its affiliates in recent years. In January 2025, the Shenzhen Securities Regulatory Bureau issued a warning letter (Administrative Supervision Decision [2025] No. 8) citing multiple compliance failures in private asset management operations, including flawed net value management, insufficient information disclosure, and delayed compensation deferral for key personnel.
Earlier in April 2024, the subsidiary received a regulatory notice from the Shenzhen Stock Exchange for procedural lapses during New Jinniu Power's private placement, where it failed to promptly submit updated materials after the issuer's controlling shareholder faced equity freezes.
Despite these challenges, the Shenzhen-based firm, listed since May 2016, reported strong financial performance for the first three quarters of 2025, with revenue reaching RMB 2.985 billion (up 24.32% YoY) and net profit of RMB 771 million (20.21% YoY growth). The investment banking arm completed 70 debt financing projects totaling RMB 25.274 billion in H1 2025 and has two Beijing Exchange IPO applications under review.
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