According to the Guangdong Securities Regulatory Bureau's website on November 17, the regulator issued a warning letter to Founder Securities Co., Ltd.'s Guangzhou Jinyu Erjie Securities Branch for five major violations.
The violations include: providing investors with answers to knowledge assessment questionnaires, inadequate management of fund sales operations, non-compliant investment advisory practices, poor personnel management, and insufficient compliance mechanisms.
The Guangdong Securities Regulatory Bureau stated that these actions violated multiple regulations, including the "Securities and Futures Investor Suitability Measures," "Securities Investment Fund Sales Management Measures," "Interim Provisions on Securities Investment Advisory Business," and "Compliance Management Measures for Securities Companies and Securities Investment Fund Management Companies."
As a result, the regulator imposed administrative supervision measures, requiring the branch to rectify its practices.
On the same day, the bureau also issued warnings to Nie Jing, the former head of the branch, for failing to fulfill management responsibilities, and Lei Gang, a former client manager, for privately accepting client trading orders and agreeing to share investment profits with clients. Lei Gang was deemed unfit for client-related roles for one year.
This is not the first time Founder Securities has faced regulatory scrutiny. In June, the company received an inquiry from the Shanghai Stock Exchange regarding its 2024 annual report disclosures, covering issues such as declining investment returns and risks in repurchase assets.
Earlier, on March 28, the China Securities Regulatory Commission (CSRC) issued nine penalties, including one targeting Founder Securities for insufficient due diligence and lax internal controls. In 2024, the firm was also ordered to correct violations involving analysts privately recommending stocks and leaking research reports.
Despite regulatory challenges, Founder Securities reported strong Q3 2024 results, with operating revenue up 67.17% year-on-year to 9.082 billion yuan and net profit surging 93.31% to 3.799 billion yuan.
However, major shareholder China Cinda Asset Management recently announced plans to sell up to 1% of its stake, potentially cashing out over 670 million yuan based on the November 4 closing price of 8.22 yuan per share. This marks Cinda's sixth planned reduction in three years, with three completed sales totaling over 900 million yuan.
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