Tianfeng Securities Faces Its "Darkest Hour": Receiving fines exceeding 10 million yuan, the former chairman is permanently banned from the industry, and the private fund distribution business has been suspended for 2 years.

Beijing Business Daily News (Reporter Liu Yuyang) — On March 13, Tianfeng Securities issued multiple announcements regarding administrative regulatory measures and penalties imposed by the Hubei Securities Regulatory Bureau and the Fujian Securities Regulatory Bureau.

According to the announcements, on March 13, Tianfeng Securities received an “Administrative Penalty Decision” from the Hubei Securities Regulatory Bureau. The bureau stated that, upon investigation, Tianfeng Securities illegally provided financing to its shareholders or related parties, and failed to fulfill information disclosure obligations as required, with significant omissions in its annual reports. Based on these violations, the Hubei Securities Regulatory Bureau decided to issue a warning to Tianfeng Securities and impose a fine of 15 million yuan.

Former Chairman Yu Lei, former Director and President Wang Linjing, Executive Vice President Feng Lin, Vice President and Executive Vice President Zhai Chenxi, Vice President and Chief Financial Officer Xu Xin were all given warnings and fined between 3 million and 6 million yuan. Additionally, Yu Lei and Xu Xin were subject to lifelong market bans.

Also on March 13, Tianfeng Securities received a decision from the Hubei Securities Regulatory Bureau to suspend certain business operations, discipline relevant personnel, and conduct regulatory interviews, as well as a decision to suspend related business and issue a warning letter to Tianfeng Tianrui Investment Co., Ltd.

The Hubei Securities Regulatory Bureau pointed out that, upon investigation, Tianfeng Securities engaged in several violations, including recommending financial products not sold through the company, collaborating with Wuhan Contemporary Tianxin Wealth Investment Management Co., Ltd. inappropriately, selling Fusheng Anxin Stable No. 1 private equity fund improperly, making unwise business decisions, inadequate control over subsidiaries and branches, and failing to effectively manage risks. Furthermore, Tianfeng Securities also had issues such as inaccurate disclosures of 2022 earnings forecasts, irregular production and release of research reports, non-standard practices in investment banking projects, inadequate organizational restructuring related to private fund business, improper personnel management and filing, and violations related to the scope of property subsidiary operations.

The Hubei Securities Regulatory Bureau stated that these issues reflect deficiencies in Tianfeng Securities’ management, internal controls, and compliance risk management. These violations led to the decision to implement three supervisory measures, which will be recorded in the securities and futures market integrity archive. Specifically, Tianfeng Securities is suspended from selling private equity financial products for two years starting from the receipt of the decision; within 10 working days of receiving the decision, responsible personnel involved in the violations must be disciplined according to company regulations, and within three working days of disciplinary decisions, the company must report in writing to the Hubei Securities Regulatory Bureau; the chairman, president, compliance director, and chief risk officer are required to attend regulatory interviews at the bureau with valid ID on March 19 at 10 a.m.

Additionally, the Hubei Securities Regulatory Bureau noted that Tianfeng Tianrui Investment Co., Ltd. engaged in activities beyond its scope, improperly managed some private fund products, and issued private debt outside of market practices. The bureau decided to suspend the establishment of new private fund products for one year and issue a warning letter to Tianfeng Tianrui Investment Co., Ltd. The company is prohibited from establishing new private fund products within one year of receiving the decision, and this measure will be recorded in the securities and futures market integrity archive.

Furthermore, on March 13, Tianfeng Securities also received a “Penalty Decision” from the Fujian Securities Regulatory Bureau. The investigation revealed that on December 31, 2021, the Quanzhou Intermediate People’s Court of Fujian issued an “Execution Ruling,” ordering the debtor Su Mouxu and Fujian Nan’an Xiongchuang Investment Center (Limited Partnership), which held a total of 41.372 million shares of Yong’an Forestry and dividends, to be delivered to Tianfeng Securities to settle related debts. On the same day, Tianfeng Securities, as the applicant, received the execution ruling, and held 12.29% of Yong’an Forestry’s total shares.

According to regulations, Tianfeng Securities should have disclosed this shareholding change promptly, but it only sent a “Notification Letter” on February 23, 2022, and a “Brief Equity Change Report” on March 7, 2022, to Yong’an Forestry. The failure to disclose the shareholding change in a timely manner constituted a violation of relevant rules. The Fujian Securities Regulatory Bureau decided to order Tianfeng Securities to correct the issue, issued a warning, and fined 4 million yuan. Additionally, Wang Linjing, the company’s president responsible for the violation, was given a warning and fined 1.4 million yuan.