A seemingly routine case update from Sierte has unexpectedly thrust Guoyuan Securities and one of its sponsoring representatives, Sun Bin, into the center of public scrutiny.
According to Sierte's announcement, a previous executive has been accused of embezzlement and bribery, with the case now under prosecution. Notably included in the lengthy list of individuals involved is Sun Bin, charged with bribery as a non-state employee. This incident acts like a deep-water bomb, revealing the substantial risks inherent in the "deep ties" between sponsoring representatives and clients, while also exposing the numerous challenges Guoyuan Securities has faced in its investment banking operations in recent years.
Even before the incident with Sun Bin, Guoyuan Securities’ investment banking department was already facing turbulence: an astonishing 63.16% withdrawal rate of IPO projects, ongoing regulatory measures, investigations into senior executives, and two and a half consecutive years of investment banking losses. This series of adverse events points sharply to potential flaws in internal controls and professional standards. As this crisis, ignited by a singular event, unfolds, it severely tests the development of Guoyuan Securities' investment banking division.
The connection between Guoyuan Securities and this scandal began when its sponsoring representative Sun Bin was implicated in a criminal case involving a client. Rewind to late 2023, where Sierte discovered that certain management personnel were suspected of using their positions to embezzle substantial assets from its wholly-owned subsidiary, Guizhou Lufun Industrial Co., Ltd. (hereafter referred to as Guizhou Lufun). After multiple discussions with relevant personnel, who refused to cooperate and subsequently resigned, the company filed a report on January 17, 2024.
After several months of investigation, significant progress was made on September 29 this year, when Sierte announced that it had received a notification from the prosecutor's office, indicating that the case had been transferred from the police for prosecution.
According to this notification, not only were former board members and executives from Sierte involved in this case, but also a key external figure—Guoyuan Securities' sponsoring representative Sun Bin. The documents indicated that Sun Bin, along with Sierte's former executives, was suspected of bribery as a non-state employee and embezzlement.
Public records show that Sun Bin is undeniably a "veteran" within Guoyuan Securities. According to the website of the China Securities Association, he has been with Guoyuan Securities since entering the industry in 2008 and officially registered as a sponsoring representative in August 2014. Notably, Sun Bin's business ties with Sierte can be characterized as "deeply intertwined." Since its IPO, Sierte has completed three rounds of equity financing, with Sun Bin sponsoring all but the first one in 2011. The 2015 private placement project represented his first sponsorship deal after becoming a representative. This long-term and close cooperation has facilitated business for both sides but also set the stage for current risks to surface.
Prior to Sierte's official announcement, market insiders had begun to sense something unusual. From June to July of this year, multiple listed companies, including Guangda Special Materials, Qia Qia Food, and Jinzhongzi Liquor, released similar announcements stating that due to personal reasons, Sun Bin could no longer serve as the continuous supervisory sponsoring representative, and Guoyuan Securities appointed other personnel to take over his duties. At the time, the vague mention of "personal reasons" did not raise widespread concern, but in hindsight, it appears more as a "quiet decoupling" before the risk escalation.
If Sun Bin's involvement in this case is seen as an unexpected "black swan" event, then the issues exposed in Guoyuan Securities' investment banking practices resemble a long-standing "gray rhino." In recent years, the quality of the company’s investment banking operations, especially in IPO sponsorship, has faced significant market skepticism, evidenced by the high withdrawal rates.
According to Wind data, from 2023 to 2024, Guoyuan Securities served as the sponsor for 19 IPO projects, of which 12 were withdrawn, marking a staggering withdrawal rate of 63.16%. This has raised widespread doubts about the company’s professional capacity and project selection criteria.
Among these withdrawn projects, two are particularly noteworthy, resulting in regulatory actions. The first is the Anxin Electronics project, which withdrew its application in September 2023. In February 2025, the Shanghai Stock Exchange issued a disciplinary notice, pointing out significant deficiencies in Guoyuan Securities' verification processes. The exchange determined that Guoyuan had issued multiple reports on critical matters such as research personnel, R&D investment, and revenue, all of which incorrectly stated that the disclosures were truthful and accurate. Consequently, the exchange criticized Guoyuan and imposed a six-month suspension of practice on two sponsoring representatives for this project.
The second case is the Dachang Technology project, which withdrew its application in August 2024. In August 2025, the Shenzhen Stock Exchange took action, criticizing the two representatives for failing to adequately address and review relevant matters during their practice, along with shortcomings in the funds flow verification process. Ultimately, the exchange implemented self-regulatory measures involving discussions with both representatives.
In addition to the specific criticisms from stock exchanges, warnings from local securities regulators further affirm that the challenges faced by Guoyuan Securities in its investment banking division are not isolated incidents. In April 2025, the Anhui Securities Regulatory Bureau issued a warning letter highlighting issues with "insufficient execution of some internal systems and inadequate due diligence for certain projects" within Guoyuan’s investment banking activities. These consistent warnings from regulators undoubtedly indicate lapses in the internal control and management systems of their investment banking practices.
Amidst scrutiny over operational quality, the stability and performance of Guoyuan's investment banking team have also issued red flags, indicating a challenging scenario of "internal and external troubles."
Personnel turbulence began long before Sun Bin's incident. In August 2024, a significant piece of news shocked the market: Guoyuan Securities' original investment banking headquarters general manager Wang Chen was under investigation for personal reasons. Wang was a veteran figure in Guoyuan’s investment banking operations, having been one of the first registered representatives since April 2004, and his investigation drew considerable attention to the firm’s projects.
Simultaneously, Guoyuan’s investment banking performance experienced a stark decline. Financial data reveals that the revenue from its investment banking sector plunged from 766 million yuan in 2022 to 201 million yuan in 2023 and 163 million yuan in 2024. More severely, the department's profitability came under pressure: in 2022, it achieved an operating profit of 369 million yuan, but in 2023 and 2024, due to expenditures surpassing revenues, it faced consecutive losses amounting to 89.48 million yuan and 82.39 million yuan, respectively.
This trend of losses has persisted into 2025. According to the company's semi-annual report, in the first half of 2025, Guoyuan's investment banking segment reported an income of 90.25 million yuan, a year-on-year growth of 44.78%. However, costs also remained high at 97.89 million yuan, resulting in a net loss of 7.64 million yuan. This signifies that the investment banking sector has now posted no profits for two and a half years.
In light of frequent project withdrawals and ongoing regulatory scrutiny, Guoyuan Securities addressed the aforementioned regulatory measures in its 2025 mid-year report, outlining a rectification plan. The company pledged immediate reforms, detailing four primary measures: firstly, to use this incident as a warning to strengthen compliance publicity and hold responsible parties accountable; secondly, to bolster internal protocol enforcement and refine due diligence standards; thirdly, to optimize internal controls regarding regulatory matters, enhancing quality management throughout the process; and fourthly, to analyze and summarize first-time withdrawn projects, conduct training to enhance operational capacity, and leverage financial technology to elevate professional standards.
Whether this rectification plan will facilitate Guoyuan Securities' investment banking division to overcome its challenges, and whether the company can achieve its ambition of establishing a competitively advantageous premier investment bank, remains to be seen.
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