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China's major securities brokerage CSC Financial Co, an affiliate of China CITIC Group, on Saturday refuted any assistance of financial frauds in a recent intern incident, stating that the company is ready to accept supervision to ensure compliance.
Regarding the companies that are potentially applying for getting listed revealed in the incident, CSC Financial said it will strive to minimize the impact on its clients and protect their rights and interests, said a statement seen on the company's social media account.
Industry insiders pointed out that the incident sent a warning that Chinese securities firms should enhance internal management, which will benefit the healthy development of the overall industry.
CSC Financial Co made the announcement on Saturday following a social media post a day ago, about one of the company's interns flaunting a luxury car and leaking three investment banking projects, which went viral in Chinese social media on Friday.
According to the posting, the intern drove a luxury sports car to the office, played golf after work, and disclosed details of three companies that are potentially applying for IPOs, including warehouse automation company Hai Robotics, robot maker WYBOTICS Co, and China Energy Xinkong Technology Co.
In a response, CSC Financial immediately formed a working group to conduct investigation and found out the intern was recruited abnormally, violating company rule, noting that the person in charge of the intern's recruitment was fired, and the company will seek accountability of the head of the department.
The case could produce ripple effects on brokerages' IPO business, Dong Shaopeng, a senior research fellow with the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Sunday.
Dong said that the rush to increase IPOs may lead to companies' falsification, and fraudulent auditing work, and he called for more efforts from Chinese securities firms to refine their business operations and assets management.
China Securities Regulatory Commission (CSRC) announced on April 9, 2024, to strengthen inspections on companies seeking IPOs in 2024 by increasing the intensity of inspections, the Xinhua News Agency reported. Inspections will be carried out on at least 25 percent of the applicants planning IPOs this year, up from about 5 percent in 2023.
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