Nanfang Daily, Nanfang+:
All parties abhor financial fraud practices in listed companies. We have noticed that the CSRC has repeatedly said that it will focus on preventing and cracking down on fraud. How will the CSRC intensify its crackdown on financial fraud of listed companies?
Guo Ruiming:
Financial fraud undermines the bottom line of the capital market, and must be cracked down on resolutely. The CSRC has a very firm attitude on this. In recent years, we have invested heavily in regulatory resources. Some of the cases that have attracted people's attention have reflected our efforts. However, frankly speaking, there is still a long way for us to go to meet the expectations of all parties in the market. Going forward, we will work with all regions and departments to strengthen synergy to build a comprehensive punishment and prevention system for cracking down on financial fraud, which mainly includes the following aspects:
Our top priority is to crack down on five types of illegal practices. The first is long-term and systemic fraud, and fraud involving third-party collusion. Targeting these practices, we will seriously investigate the responsibilities of scammers and their accomplices, and resolutely abolish the "ecosystem" of the fraud. The second is fraudulent issuance of stocks and bonds. We will resolutely block fraudsters from entering the capital market and firmly eliminate those who sneak inside. The third involves the abuse of accounting policies and accounting estimates to manipulate profits. The fourth is falsification through activities like financing trade. The fifth is the fraudulent actions that harm the interests of listed companies. These five types are where we will focus our efforts on.
Second, we will hold those responsible to account through comprehensive means in an all-round way. In addition to administrative punishment, we will also adopt a variety of disciplinary measures. For criminal cases, we will make full use of the institutional advantages of the public security and procuratorial organs stationed in the CSRC to jointly investigate and punish a number of typical and malignant cases. In terms of civil cases, we will implement a system of advance compensation, litigation support and commitment of parties involved in administrative law enforcement to compensate investors for their losses and significantly raise the cost of illegal activities. We will also launch more cases to solidify the results. We will resolutely ban those who are most responsible from market entry. Those who meet the standards for mandatory delisting due to major violations will be resolutely delisted.
Third, we will strengthen the internal control and defense lines of companies. An effective internal control system in listed companies is a crucial foundation for preventing systemic financial fraud. Therefore, our focus is on strengthening the functions of the company's board of directors, especially boards of auditors and independent directors in anti-fraud, thus leveraging the internal checks and balances in corporate governance. At the same time, we will encourage internal reporting, and we are exploring increasing the amount of rewards for reporting. Finally, we will strengthen the responsibilities of intermediaries as "gatekeepers." For those intermediaries that lose professional ethics or collude in fraud, we will resolutely impose severe penalties, including industry bans and other penalties. Moreover, we will urge the audit evaluation agencies to timely uncover and proactively report clues of financial fraud in listed companies. We will apply lenient or mitigated punishment in accordance with the law for those who proactively report. The purpose of these measures is to leave fraudsters with nowhere to hide. Thank you.
