The actions of a leading securities firm appear to demonstrate to the industry that after making mistakes, one can be demoted and then reinstated to a higher position a few years later. This raises questions about whether the industry's principle of "due diligence" is merely four words on a piece of paper.
Gf Securities Co.,Ltd.'s Tolerance for Error
A leading securities firm is showing the industry through its actions that after making errors, a temporary demotion can be followed by a promotion back to the top after a few years. This suggests the industry's commitment to "due diligence" might be nothing more than empty words on a document.
The Eleventh Risk Warning
On July 16, 2026, *ST Qingyue issued its eleventh risk warning announcement, stating that "the company's shares may be subject to mandatory delisting due to major violations."
The same headline, repeated announcements. Investors have moved from initial panic to current numbness in just a matter of days.
Qingyue Technology listed on the STAR Market in December 2022 with an issue price of 9.16 yuan per share. Its market capitalization once surged past 18 billion yuan, attracting investor enthusiasm.
However, within just two and a half years, the fraud collapsed. The China Securities Regulatory Commission (CSRC) investigation confirmed that from 2021 to the first half of 2023, the company cumulatively inflated profits by approximately 100 million yuan and faces a proposed fine of 173 million yuan. Sponsoring representatives Liu Shijie and Zhao Ruimei were cited for "relying entirely on false materials throughout the process, conducting no substantive verification. Core clients were mostly shell companies."
Now, the stock price has fallen below par value, with 11 consecutive delisting risk announcements issued. As a listed company turns its "delisting warnings" into a serial drama, where is the original sponsoring institution?
Following the 400 Million Yuan Advance Compensation
The sponsoring institution, Gf Securities Co.,Ltd., had already advanced approximately 400 million yuan in compensation to investors on May 8, 2026. The board of directors passed the resolution unanimously with 11 votes. The announcement's wording was notably calm: "This will not have a significant impact on the company's operations."
Once the news broke, the label of "conscientious broker" spread across the internet.
Advance compensation for investor losses is indeed the right thing to do. However, does a securities firm's responsibility end merely with paying compensation?
Some clues to this question might be found in Gf Securities Co.,Ltd.'s compliance record in recent years.
This leading brokerage's experience in the sponsorship business has not been entirely smooth.
The 30 Billion Yuan Kangmei Legacy
Rewind to 2020.
From media scrutiny to regulatory follow-up, the verification of Kangmei Pharmaceutical's 30 billion yuan financial fraud shocked the entire financial sector.
As the sponsoring institution, Gf Securities Co.,Ltd. faced an exceptionally severe penalty in the securities industry—a six-month suspension of its sponsorship qualification and a 12-month suspension on accepting documents related to bond underwriting business.
At that time, two senior executives overseeing investment banking at Gf Securities Co.,Ltd.—Managing Deputy General Manager Qin Li and Deputy General Manager Ouyang Xi—were publicly reprimanded and subjected to regulatory interviews by the Guangdong Securities Regulatory Bureau. The regulator also restricted Qin Li's right to receive compensation beyond his base salary for 2017 and 2018, requiring him to return any such amounts already received.
In December 2020, Gf Securities Co.,Ltd. made a board resolution: both Managing Deputy General Manager Qin Li and Deputy General Manager Ouyang Xi were demoted to business directors.
The demotion was seen at the time as an accountability measure for the Kangmei case and a response to investors.
However, the story did not end there.
Demotion Without a Pay Cut
A noteworthy detail is that these two executives, "demoted" after the Kangmei case, actually saw their compensation increase rather than decrease.
In 2020, the year the Kangmei penalties were imposed, Qin Li's compensation was 2.3396 million yuan, a year-on-year increase of 15.19%. Ouyang Xi's compensation was 2.3318 million yuan, a year-on-year increase of 17.96%. Their job titles were lowered, but their pay maintained a growth trajectory.
This sparked discussion among some market observers at the time—did demotion without a pay cut imply that the internal assessment of these executives' accountability differed from the publicly announced "demotion"?
The answer came three years and four months later, in May 2024, at the first meeting of Gf Securities Co.,Ltd.'s eleventh board of directors. Qin Li was appointed as General Manager, and Ouyang Xi was appointed as Deputy General Manager. The two executives demoted to "directors" due to the Kangmei case were promoted—one to the company's top leadership position and the other back to the role of Deputy General Manager.
Gf Securities Co.,Ltd. stated that the appointment of senior executives and the board's re-election were carried out in accordance with legal procedures.
As a leading listed securities firm, procedural compliance is a given. However, when regulatory accountability is followed by personnel adjustments that appear to be a predictable transitional period, and public reprimands and regulatory interviews become minor footnotes in a career history, the market inevitably questions the practical effectiveness of such accountability.
Not an Isolated Compliance Incident
The Kangmei case is not Gf Securities Co.,Ltd.'s only compliance record. According to media reports, over the past six years, Gf Securities Co.,Ltd. has received seven penalties from the CSRC.
Among these is the Meishang Ecology case, which has been previously commented on.
In September 2023, Gf Securities Co.,Ltd. was fined and ordered to disgorge 10.21698 million yuan by the CSRC for failing to perform due diligence in its sponsorship service for ST Meishang's 2018 private share placement and for issuing documents containing false records. However, the two sponsoring representatives who signed off—Zhou Chunxiao and Wu Guangbin—did not appear on the corresponding Class C list.
Reflections on the Tolerance Level
This leads to a question worth exploring: What is the internal "tolerance for error" at Gf Securities Co.,Ltd. regarding management accountability linked to regulatory penalties?
The Kangmei case involved 30 billion yuan in fraud. The penalized executives were reinstated and promoted three years after demotion.
The Meishang Ecology case resulted in over 10 million yuan in fines and disgorgement. Personnel involved were adjusted, but business continued as usual.
The Qingyue Technology case has seen eleven risk warnings issued, with 400 million yuan in advance compensation paid. Meanwhile, the executives penalized in the Kangmei case now hold the reins of the company.
When a standard institutional requirement is celebrated as a moral triumph, it indicates how far our market is from maturity.
Advance compensation is fundamentally the sponsoring institution's duty in fulfilling its responsibilities. However, when an institution with compliance issues across multiple projects performs a routine, system-required action and is labeled a "conscientious broker" by the market, it perhaps reflects a subtle shift in market expectations.
Concluding Thoughts
From Kangmei to Meishang to Qingyue, Gf Securities Co.,Ltd.'s sponsored projects have repeatedly attracted regulatory scrutiny, yet the involved senior executives have "landed safely" after a period of job adjustments. Qin Li moved from director back to general manager; Ouyang Xi moved from director back to deputy general manager. There appears to be a thought-provoking correlation between regulatory fines and career advancement.
*ST Qingyue's risk warning announcements remain posted on the Shanghai Stock Exchange website. Whether investors still read them word for word is unknown. The 400 million yuan in advance compensation has also been gradually absorbed by the market over the past two months.
But perhaps a more enduring question lies ahead: By demonstrating through personnel arrangements that job adjustments due to regulatory penalties can be a transition with a clear time limit, what weight does the principle of "due diligence" truly carry in specific professional conduct?
In the story of Gf Securities Co.,Ltd., the answer is blowing in the wind.
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