The Mystery Behind Haitong Securities’ Deputy General Resignation: Major Upheaval in Investment Banking Business (AI Translation)
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文｜财新 王娟娟 全月
By Caixin's Wang Juanjuan and Quan Yue
【金融我闻/王娟娟 全月】近期业绩不振、股价破净的海通证券（600837.SH/06837.HK），因一纸突然而来的高管辞职公告，再度陷入漩涡。
[Finance News/Wang Juanjuan Monthly] Recently underperforming and trading below book value, Haitong Securities (600837.SH/06837.HK) has found itself in the spotlight again following a sudden announcement of a top executive's resignation.
7月31日，市场流传，海通证券姜姓高管“进去了”，该公司并购和投行的老总“也进去了”，甚至还传出该公司有高管从边境跑路之类的说法。下午5点，海通证券发布一则简短公告，称公司董事会收到副总经理姜诚君的辞职报告，后者因个人原因申请辞去在海通证券的所有职务。
On July 31, rumors circulated in the market that a senior executive with the last name Jiang from Haitong Securities had been "taken in," and that the company's heads of mergers and acquisitions and investment banking were also "taken in." Speculations even suggested that some executives had fled across the border. At 5 p.m., Haitong Securities issued a brief announcement stating that its board of directors had received the resignation letter from Deputy General Manager Jiang Chengjun, who resigned from all his positions at Haitong Securities for personal reasons.
失联传言刚刚流出，海通证券即公告姜诚君的辞职，引来市场更多好奇。加之正值二十届中央第三轮巡视结束不久，姜诚君是否与其他“落马者”案件相关？
Just as rumors of a disappearance began to surface, Haitong Securities promptly announced Jiang Chengjun's resignation, stirring further curiosity in the market. Coupled with the fact that this comes right after the conclusion of the third round of inspections by the 20th Central Committee, questions arise as to whether Jiang Chengjun's situation is related to other recent cases of official downfall.
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- Haitong Securities' Deputy General Manager Jiang Chengjun resigned amid rumors of an investigation involving him and other senior executives.
- Haitong Securities' stock slightly declined by 0.77%, closing at 9 yuan per share, reflecting concerns in the market.
- Jiang Chengjun, a seasoned investment banker, is under investigation, potentially due to compliance issues in projects sponsored by Haitong Securities' investment banking division.
Haitong Securities, a prominent investment banking firm, has come under scrutiny following the sudden resignation of its Deputy General Manager, Jiang Chengjun [para. 1]. Rumors circulated about several executives, including Jiang, being "taken in" by authorities, possibly fleeing. Haitong Securities confirmed Jiang's resignation for personal reasons on July 31, while market speculation linked this event to a broader investigation following the 20th Central Committee's inspection [para. 2][para. 3].
While Jiang reportedly vanished on July 29, the same day as another key figure, Dong Guoqun from the Shanghai Stock Exchange, no direct connection between their cases has been established [para. 3]. Authorities confirmed that Jiang, along with subordinates Sun Wei and Sun Yingchen from Haitong's investment banking division, is under investigation. Attempts by Caixin, a financial news source, to reach them were mostly unsuccessful. Sun Wei returned a call but did not comment on cooperating with the authorities, while Sun Yingchen remained incommunicado [para. 4][para. 5][para. 6]. Haitong Securities’ stock saw a slight decline of 0.77% following these events [para. 7].
Jiang, an experienced investment banker since 2000 at Haitong Securities, graduated from Xiamen University. His significant contributions included securing many key projects, like China Minsheng Bank and Xiamen International Trade Group's IPOs. In 2017, Jiang became Assistant General Manager, further overseeing major STAR Market projects, and in 2023 became Deputy General Manager, focusing on investment banking [para. 8][para. 9][para. 10]. A significant structural reform in April 2023 in the investment banking division saw Jiang's trusted subordinates, Sun Wei and Sun Yingchen, receiving key roles [para. 11][para. 12].
The context of Jiang’s investigation involves potential irregularities in sponsored projects. Investment banking sponsors are critical in securing approvals for listed companies, often prone to bribery and insider trading. Haitong Securities-sponsored Ruian Gene faced legal problems in July 2024, with key personnel detained for illegal business operations [para. 13][para. 14]. Jiang has reportedly been connected to many projects, dealing with IPOs on both the Shenzhen and Shanghai Stock Exchanges [para. 15][para. 16][para. 17].
Haitong Securities' previous compliance issues are notable. On January 29, 2024, the Shanghai Stock Exchange penalized Jiang and colleagues for inadequate due diligence and quality control in IPO sponsorships [para. 18]. Poor performance and numerous compliance issues have shadowed Haitong’s recent investment banking operations, despite underwriting many STAR Market projects [para. 19][para. 20]. In 2024, Haitong’s equity underwriting dropped significantly, reflecting a wider market slowdown and continued regulatory penalties [para. 21].
Haitong has faced several fines, especially from the CSRC, underlining the need for compliance rectification. The company has seen multiple projects withdrawn or terminated, largely due to errors or data falsifications during due diligence [para. 22][para. 23]. With 60 queued IPOs and many withdrawals, these infractions are becoming evident. Haitong exceeded other leading firms in having Class C sponsor representatives due to penalties in 2024, highlighting repeated compliance failures. Cases of financial fraud among sponsored companies further emphasized the tightening regulatory environment [para. 24][para. 25][para. 26].
Hence, the investigation into Jiang and certain project sponsors exemplifies the critical need for Haitian Securities to address rigorous compliance and due diligence to sustain its market standing amidst regulatory scrutiny [para. 27].
- Haitong Securities
- Haitong Securities (600837.SH/06837.HK) is facing turmoil due to poor performance and stock price issues. Recently, Deputy General Manager Jiang Chengjun resigned amid rumors of his detention. Jiang and two of his subordinates are reportedly under investigation concerning alleged irregularities in their investment banking projects. The company’s IPO project quality and regulatory compliance have come under scrutiny, affecting its business operations.
- Xiamen International Trade Group Corp.
- Xiamen International Trade Group Corp. (stock symbol: 600755.SH), where Jiang Chengjun initially worked, is a state-owned listed company in Xiamen. Jiang held various roles such as Financial Securities Department Deputy Manager, Investment Management and Development Department Manager, and Vice General Manager. The company was one of Jiang's early career stops before he joined Haitong Securities' investment banking department.
- Xiamen C&D Inc.
- Xiamen C&D Inc. (厦门国贸) is a state-owned listed company in China, known for its diverse business operations. It was one of the companies where Jiang Chengjun, a former executive of Haitong Securities, previously worked. He served in various roles including Deputy Manager of Financial Securities, Investment Management & Development Manager, and Board Secretary.
- SMIC
- SMIC (Semiconductor Manufacturing International Corporation) is one of the major projects sponsored by Haitong Securities. This indicates the influential role of Haitong's high-level executives and veteran investment bankers in securing significant deals for the company.
- Raygen Biotech
- Raygen Biotech (睿昂基因) is an in vitro diagnostics company focused on the oncology field. Recently, many of its executives, including the Chairman and key technical personnel, have been under judicial investigation for alleged illegal operations. The company was listed in May 2021 with Haitong Securities as its sponsor but switched to Guotai Junan for subsequent convertible bond issuance.
- Guotai Junan Securities
- According to the article, Guotai Junan Securities was chosen by Rygene (688217.SH) as the new sponsoring agency for its convertible bond issuance in November 2022, replacing Haitong Securities. Additionally, in 2021, Guotai Junan's Investment Banking Department General Manager Zhu Yi was investigated, with relevant clues pointing to former SSE review center deputy director Cao Jian.
- Yunnan Xiyi Industrial Co., Ltd.
- Yunnan Xiyi Industrial Co., Ltd. (stock code: 002265.SZ, now known as Construction Industry) is a company that was involved in the IPO projects handled by Jiang Chengjun of Haitong Securities. It operated in the industrial sector and was one of the six companies under the purview of Jiang during his tenure at Haitong Securities.
- Hubei Huitian New Material Co., Ltd.
- Hubei Huitian New Material Co., Ltd. (Ticker: 300041.SZ) is identified in the article as one of the companies for which Jiang Chengjun acted as a sponsor during its IPO. This firm was successfully listed on the Shenzhen Stock Exchange.
- Zhongyuan Special Steel Co., Ltd.
- Zhongyuan Special Steel Co., Ltd. (now known as COFCO Capital) is one of the companies involved in projects sponsored by Jiang Chengjun at Haitong Securities. It is listed on the Shenzhen Stock Exchange with the code 002423.SZ.
- Beijing Gaomeng New Material Co., Ltd.
- Beijing Gaomeng New Material Co., Ltd. (300200.SZ), also known as Gaomeng Xincai, is one of the companies listed in Shenzhen and was involved in a 2011 IPO. It was co-sponsored by Jiang Chengjun and Sun Yingchen from Haitong Securities.
- Fujian Minfa Aluminium Inc.
- Fujian Minfa Aluminium Inc. (stock code: 002578.SZ) was one of the companies for which Jiang Chengjun, the high-ranking executive at Haitong Securities, served as a sponsor. The company went public in April 2011. Jiang's subordinate, Sun Yingchen, was also involved in the underwriting of Fujian Minfa Aluminium's IPO.
- Guangdong East Power Co., Ltd.
- Guangdong East Power Co., Ltd. (300376.SZ), also known as ST East Power, is one of the companies that was underwritten by Jiang Chengjun during his tenure at Haitong Securities. The company's specific details were not elaborated on in the article.
- Ningbo Peacebird Fashion Co., Ltd.
- Ningbo Peacebird Fashion Co., Ltd. (603877.SH), also known as Peacebird, is one of the companies initially sponsored by Jiang Chengjun while at Haitong Securities. It is listed on the Shanghai Stock Exchange and focuses on producing and selling fashion apparel and accessories.
- Shanghai Daimay Automotive Interior Co., Ltd.
- Shanghai Daimay Automotive Interior Co., Ltd. (603730.SZ) is a company whose IPO was sponsored by Haotong Securities, with Jiang Chengjun involved in the process. The company specializes in producing automotive interior products.
- Advanced Micro-Fabrication Equipment Inc. China
- The article does not mention Advanced Micro-Fabrication Equipment Inc. China (AMEC). It primarily discusses the resignation and investigation of Haaitong Securities' executives and issues within the company’s investment banking operations.
- Shanghai IRay Optoelectronics Technology Co., Ltd.
- Shanghai IRay Optoelectronics Technology Co., Ltd. (ticker: 688301.SH, also known as IRay Technology) is one of the companies successfully sponsored for IPO by Jiang Chengjun of Haitong Securities. It is a prominent stock on the STAR Market (科创板) with a current share price above 100 yuan.
- Zhuojin Co., Ltd.
- Zhuojin Co., Ltd. (688701.SH) is a company listed on the STAR Market (Sci-Tech Innovation Board). It was found by the China Securities Regulatory Commission (CSRC) to have inflated its revenue and profits during the IPO listing period. The company went public in September 2021, but by 2023, it was caught for financial fraud, specifically for the first half of 2021.
- April 2023：
- Haitong Securities carried out a significant functional adjustment reform in its investment banking division.
- January 29, 2024：
- Shanghai Stock Exchange issued regulatory warnings to Jiang Chengjun, Zhang Weidong, and Xu Can due to significant shortcomings in Haitong Securities' IPO sponsorship duties.
- July 22, 2024：
- Rui An Gene announced that the company's Controller, Chairman and General Manager, and core technical personnel along with other executives were subjected to compulsory measures by public security authorities.
- July 29, 2024：
- Dong Guoqun was taken away for investigation in his office at Shanghai Stock Exchange.
- July 29, 2024：
- People around Jiang Chengjun began to notice they couldn't reach his personal phone, indicating his 'disappearance.'
- July 31, 2024：
- Sun Wei returned Caixin’s call, stating he is currently free and unimpeded.
- July 31, 2024 at 5 p.m.：
- Haitong Securities issued a brief announcement stating that its board of directors had received the resignation letter from Deputy General Manager Jiang Chengjun.
- By August 1, 2024：
- No response received from Haitong Securities regarding Jiang Chengjun's investigation.
- August 1, 2024：
- Haitong Securities' stock price slightly declined by 0.77%, closing at 9 yuan per share.
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