Zhejiang Merchants Securities Once Again Named by Regulators: Core Business Personnel Have Insufficient Industry Experience and Compliance Management Is Inadequate

Text | Wang Shengyu

Editor | Liu Peng

Less than two months after the last incident, Zheshang Securities has once again been named by regulators.

On March 13, the Zhejiang Securities Regulatory Bureau announced a decision to order Zheshang Securities to make corrections, directly pointing out issues such as insufficient experience among core business personnel and inadequate compliance management.

The Zhejiang Securities Regulatory Bureau’s notice states that some core personnel in Zheshang Securities lack at least two years of custody business experience, their custody office is not independent, and the standards and procedures for supervising fund investments are incomplete. Additionally, the conduct of custody department staff and fund management practices are not sound. Furthermore, Zheshang Securities’ compliance management of its asset management subsidiaries, private equity fund subsidiaries, and alternative investment subsidiaries is also inadequate.

According to Article 40 of the “Regulations on the Custody Business of Securities Investment Funds” and the first paragraph of Article 32 of the “Regulations on Compliance Management of Securities Companies and Securities Investment Fund Management Companies,” the Zhejiang Securities Regulatory Bureau has taken administrative regulatory measures requiring Zheshang Securities to correct its practices, and this will be recorded in the integrity archive of the securities and futures market. The company is required to strengthen internal controls and compliance management across all business areas, hold relevant personnel accountable according to internal accountability systems, and submit a written report on rectification and accountability within three months.

It is noteworthy that the regulatory measures against Zheshang Securities this time come less than two months after the previous action.

On January 23, the Zhejiang Securities Regulatory Bureau issued a warning letter to Zheshang Securities’ Hangzhou branch, citing issues such as lax compliance review of investor transactions and inadequate management of real-name account systems. Management personnel Lin Changfu and Ying Wenmin were also issued warning letters, and this was recorded in the integrity archive of the securities and futures market.

Despite frequent compliance issues, Zheshang Securities stated in its 2025 semi-annual report that under the leadership of the Chief Risk Officer and Compliance Director, the company has strengthened its compliance and risk control team, with key business departments equipped with dedicated risk control positions. The company continues to enhance its talent pool and professional capabilities, aiming to improve the coverage and effectiveness of its risk management. However, on its official website, regulations regarding professional conduct still date back to 2019, nearly seven years without updates.

Source: Zheshang Securities Official Website

Zheshang Securities was established on May 9, 2002, and is headquartered in Hangzhou, Zhejiang Province. With a registered capital of 4.574 billion yuan, it is Zhejiang’s first state-controlled listed securities firm. As of the close on March 13, its A-shares had a total market value of 47 billion yuan.

In terms of performance, in the first three quarters of 2025, Zheshang Securities reported operating revenue of 6.789 billion yuan, a year-on-year increase of 66.73%, and net profit of 1.892 billion yuan, up 49.57% year-on-year.