CHINA will show “zero tolerance” toward securities and accounting fraud and will step up a crackdown on major capital-markets crimes, financial regulators said after a meeting of the Financial Stability Development Committee. The meeting Sunday was chaired by Vice Premier Liu He, the State Council said in a statement. The regulators said they would toughen penalties and establish a crime-busting team with relevant agencies to strengthen cooperation. They would also deepen the reform of the market’s delisting mechanism to weed out bad companies from the country’s stock markets. China has been trying to limit the country’s reputational damage after accounting scandals at companies including Kangmei Pharmaceutical, a producer of traditional Chinese medicines, and Kangde Xin Composite Material Group, a producer of high polymer materials. After a months-long regulatory probe into its finances, Kangmei said in May last year that it had overstated its cash positions by 29.9 billion yuan (US$4.27 billion) by using false documents and transaction records — an amount one lawyer said was unprecedented in China. The Shanghai-listed firm admitted to “serious” deficiencies in its corporate governance and internal controls. The China Securities Regulatory Commission (CSRC) on Friday punished GF Securities Co. for its role in the US$12.6 billion financial fraud at drugmaker Kangmei. GF Securities was banned from the securities-sponsor business for six months, and from bond underwriting for a year. CSRC Chairman Yi Huiman said in May that the regulator would spare no efforts in cracking down on financial fraud at listed companies. The securities regulator in May blacklisted six executives for their role in the accounting scandal at Kangmei and also ordered the firm to pay a 600,000 yuan fine. (SD-Agencies) |