Haitong Securities Hit by Business Ban for Yongcheng Coal Default
What’s new: China’s top securities regulator slapped a one-year business ban on Haitong Securities Co. Ltd. for allegedly helping a bond defaulter to sell bonds illegally.
The China Securities Regulatory Commission (CSRC) said Wednesday it had suspended Haitong from conducting bond investment advisory business for institutional investors due to its lax risk control measures. Several company executives were also punished.
Haitong did not effectively control and prevent risk when it conducted bond business, causing serious negative effects on the market, said the CSRC.
The background: Haitong, one of China’s biggest brokerages, became part of a widening probe of the high-profile bond default by state-owned Yongcheng Coal and Electricity Holding Group Co. Ltd. last year. The Shanghai-based brokerage house is a major underwriter for bonds issued by Yongcheng Coal and other state-owned enterprises.
Yongcheng Coal’s default on a 1 billion yuan bond in November triggered a chain reaction, affecting other SOEs and coal mining companies, which either canceled bond issuance plans or slashed fundraising targets.
In January, China's interbank bond market regulator criticized Haitong for providing assistance to Yongcheng Coal in the illegal issuance of bonds and market manipulation.
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