In Less Than 2 Months, Zhejiang Securities Receives Another Fine

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Source | Deep Blue Finance

On March 13, 2026, the Zhejiang Securities Regulatory Bureau took administrative regulatory measures requiring Zhejiang Securities Co., Ltd. (601878.SH) to make corrections and recorded it in the integrity archive of the securities and futures market.

Importantly, this is the second time the company has been named by regulators in less than two months.

According to the regulatory decision, Zhejiang Securities has multiple serious violations in its securities investment fund custody business:

1. Some key personnel lack two years of custody business experience, violating Article 8, Item 3 of the “Regulations on the Administration of Securities Investment Fund Custody Business” regarding mandatory qualifications for practitioners;

2. The custody business office is not independent and cannot achieve physical separation from other businesses, increasing the risk of insider information leaks and conflicts of interest;

3. The standards and procedures for fund investment supervision are incomplete, and the mechanisms for managing custody staff and the funds they oversee are not sound, weakening the custodian’s checks and balances over fund managers.

Additionally, regulators pointed out that Zhejiang Securities’ compliance management of its asset management subsidiaries, private equity fund subsidiaries, and alternative investment subsidiaries is inadequate, failing to effectively perform the parent company’s transparent management responsibilities, violating Article 3 of the “Regulations on Compliance Management of Securities Companies and Securities Investment Fund Management Companies,” which requires a comprehensive compliance system.

It is worth noting that this penalty came only 49 days after the Zhejiang Securities Regulatory Bureau issued a warning letter to Zhejiang Securities’ Hangzhou branch on January 23, 2026. At that time, the company was held accountable for “insufficient review of investor trading compliance and inadequate real-name account management,” and relevant managers were also recorded in the integrity archive.

Looking back over the past year, Zhejiang Securities has been repeatedly named by regulators. In March 2025, the China Securities Regulatory Commission ordered it to rectify issues in its investment banking business and issued warning letters to two senior executives; in July 2025, the Ningbo Securities Regulatory Bureau took regulatory measures against its Ningbo Zhongshan East Road branch for compliance management deficiencies; in November 2025, its wholly owned subsidiary Zhejiang Securities Asset Management was warned for insufficient due diligence on directors and lax personnel access controls.

However, these compliance crises stand in stark contrast to its impressive performance.

In the first three quarters of 2025, Zhejiang Securities achieved operating income of 6.789 billion yuan, a year-on-year increase of 66.73%; net profit attributable to the parent was 1.892 billion yuan, up 49.57% year-on-year; total assets reached 2.19048 trillion yuan, a 42.16% increase from the end of 2024. The company explicitly stated in its 2024 annual report that in 2025 it would “fully expand the institutional business scale,” focusing on high-growth areas such as custody outsourcing and mergers and acquisitions. The custody business involved in this penalty is one of its strategic focus areas.

It is reported that the company previously claimed in its semi-annual report to “strengthen compliance risk control talent team building,” but its official website’s “Code of Conduct” has not been updated since 2019, nearly seven years ago.

Internal turmoil also persists. In early 2026, Zhejiang Securities Research Institute experienced a large-scale resignation wave, with chief analysts from chemicals, home appliances, food and beverages, among others, leaving one after another. Fixed income chief Qin was suspended for a month after publicly revealing on social media that he “deliberately did not short to win votes,” sparking professional ethics controversy. The Zhejiang Securities Regulatory Bureau also intervened in the investigation.

Just half a month before the announcement of this penalty (February 26), Zhejiang Securities completed a leadership reshuffle, with Cheng Jingdong appointed as President, and former President Qian Wenhui transferred to Party Secretary and Chairman. The new management team faced immediate severe compliance rectification pressure. The Zhejiang Securities Regulatory Bureau has required the company to submit a written rectification and accountability report within three months and hold relevant responsible persons accountable.

As Zhejiang’s first state-controlled listed securities firm, how Zhejiang Securities can maintain growth while truly strengthening its compliance bottom line will be a key test of its governance capabilities.