GuShiio.com The current laws and regulations impose obviously insufficient penalties on financial fraud and fraudulent issuance, and the illegal income and the penalty amount are seriously unequal, making it difficult to form an effective deterrent.
focus on the two sessions| National People’s Congress Representative Tian Xuan: Suggest to further increase the crackdown on financial fraud and fraudulent issuance in the capital market
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Blue Whale News, March 5 (Reporter Hu Jie)In the process of high-quality development of my country’s capital market, financial fraud and fraudulent issuance have become major hidden dangers that restrict the healthy development of the market. Although regulatory authorities continue to intensify crackdowns, such cases continue to be banned repeatedly, seriously affecting investor confidence and market fairness.
The main reasons for this phenomenon are: the current laws and regulations provide obvious insufficient penalties for financial fraud and fraudulent issuance, and the illegal income and the penalty amount are seriously unequal, making it difficult to form an effective deterrent. At the same time, securities regulatory authorities lack enforcement means during the investigation process, making investigation and evidence collection difficult and investigation inefficient. In addition, the supervision of listed companies in my country involves multiple departments, and there are problems such as inconsistent law enforcement standards and poor information sharing, which leads to a vacuum in supervision and allows lawless elements to take advantage of it.
Blue Whale News reporter learned that on the occasion of the National Two Sessions, Tian Xuan, a representative of the National People’s Congress and president of the National Institute of Finance of Tsinghua University, submitted suggestions on further increasing the crackdown on financial fraud and fraudulent issuance in the capital market.
Tian Xuan told reporters that in order to solve these problems, we must start from the following four aspects:
The first is to improve laws and regulations and significantly increase the cost of illegal activities.Incorporate the crime of fraudulent issuance into the category of financial fraud, with the maximum penalty being raised to life imprisonment; increase the maximum sentence for securities fraud to 20 years, significantly increase the fine standard (penalties can be several times the illegal income), introduce a civil compensation mechanism, and let the offender pay a heavy price. At the same time, we will improve the sentencing provisions on financial fraud and fraudulent issuance in the Criminal Law of the People’s Republic of China, clarify the distinction between principal offenders and principal offenders and sentencing standards, and impose strict and severe penalties on principal offenders such as controlling shareholders and actual controllers. Appropriate leniency may be given to middle-level executives, and intermediaries and individuals involved in fraud should also be included in the scope of sentencing.
The second is to optimize the regulatory system and strengthen regulatory coordination.Clarify the CSRC’s supervisory power over accounting firms, urge them to perform their gatekeeper duties, and strengthen their responsibilities in the financial fraud of listed companies. Establish a regular cross-department information sharing mechanism, strengthen coordination and cooperation between the Ministry of Finance, the China Securities Regulatory Commission and other departments, unify law enforcement standards, and avoid a regulatory vacuum. Tian Xuan also suggested that the CSRC be given more law enforcement means, such as the power of compulsory investigation and the power to obtain evidence, to improve supervision efficiency.
The third is to establish a hierarchical accountability system and strengthen the implementation of responsibilities.Tian Xuan pointed out that it is necessary to clarify the boundaries of responsibilities of controlling shareholders, actual controllers, middle-level managers, intermediaries and individuals in financial fraud and fraudulent issuance, so that crimes and punishments are compatible. He said that it is necessary to improve the administrative accountability mechanism, revise the current “Accounting Law of the People’s Republic of China” and “Securities Law of the People’s Republic of China” and other laws and regulations, refine legal responsibilities and punishment standards, increase fines for intermediaries that issue false reports and provide false certificates, revoke their practicing qualifications, and impose fines and bans on relevant responsible persons.
The fourth is to strengthen international regulatory cooperation.Actively cooperate with international financial regulatory agencies to establish a regular cross-border regulatory coordination mechanism to jointly combat cross-border financial fraud and fraudulent issuance. By sharing regulatory information, unifying law enforcement standards, filling cross-border regulatory loopholes, forming a global regulatory synergy, and creating a more fair, transparent and legal international competitive environment for my country’s capital market. (Blue Whale News Hu Jiehujie@lanjinger.com)
