Western Securities Co Ltd

Recently, the Beijing Securities Regulatory Bureau and the Shenzhen Stock Exchange disclosed multiple regulatory penalty notices on the same day. China Reform Securities, Western Securities, and four signing sponsor representatives were named simultaneously. Two of the sponsor representatives were deemed unsuitable candidates and face a 12-month industry ban. According to data from YiDong, as of August 25 this year, regulators issued a total of 39 investment banking penalty tickets involving 23 brokerages. China Capital Securities ranked first with five tickets, followed by China Securities with four. Among the 50 penalty target records, 30 were individuals, including 19 sponsor representatives, three investment banking business heads, six bond project leaders or members, and two financial advisory project sponsors. Since 2026, four people have been deemed unsuitable candidates and face one-year industry bans, covering the three major business lines of IPO sponsorship, refinancing, and bond underwriting. On August 22, two sponsor representatives from China Reform Securities, Qiao Junwen and Pan Jianzhong, were separately deemed unsuitable by the Beijing Securities Regulatory Bureau and barred from holding sponsorship-related positions for 12 months. The other two unsuitable candidates came from China Securities and China Capital Securities. China Securities sponsor representative Wang Wanli was deemed unsuitable for inadequate performance in the Hongxiang Corporation private placement and convertible bond project, while China Capital Securities bond project head Hu Haitian was deemed unsuitable for failing to conduct prudent verification in a corporate bond underwriting project. In addition, Zhongtian Guofu Securities was found to have failed to act diligently in the Tunghsu Optoelectronic project. Its business revenue of 2.83 million yuan was confiscated, a fine of 14.15 million yuan was imposed, and its financial advisory business license was suspended for six months. The total confiscation and fine in the case amounted to approximately 43.05 million yuan, making it the only maximum penalty in the investment banking sector since 2026 involving a business license suspension. Regulatory focus has shifted from whether records were kept to whether the verification process was truly independent and penetrating. The scope of penalties has expanded from the IPO entry point to refinancing, mergers and acquisitions restructuring, ongoing supervision, and bond underwriting, emphasizing full-cycle project performance.

Western Securities was recently summoned by the Shenzhen Stock Exchange because its verification duties were not adequately performed while sponsoring the IPO of Naipu shares. The Shenzhen Stock Exchange pointed out that Western Securities failed to pay sufficient attention to and prudently verify irregularities in Naipu shares' internal controls related to revenue recognition and selling expenses, and that its verification of sales service providers, research and development investment, and whistleblower reports was also inadequate. The Shenzhen Stock Exchange determined that Western Securities violated the relevant provisions of the Stock Issuance and Listing Review Rules, 2024 revision, and sponsor representatives Feng Linsong and Qu Xiaolong also received regulatory letters. Naipu shares and Western Securities both withdrew their IPO application documents in March 2025.

Western Securities' investment banking arm has seen a string of project failures recently, exposing systemic internal control deficiencies. On July 28, the Jiangxi Securities Regulatory Bureau imposed a fine of 17.9 million yuan on Yuweng Information Technology for fraudulent issuance in its STAR Market IPO. Western Securities acted as the sponsor, and the liability determination for its signing sponsor representatives Gao Feng and Su Huafeng has yet to be announced. Earlier in June, the Shanghai Stock Exchange issued a regulatory warning to Western Securities sponsor representatives Zhang Suxian and He Si for failing to perform their duties adequately in the ST Xin'an convertible bond project, not detecting that the company had used improper accounting treatments to embellish its performance, resulting in the company not meeting issuance conditions in substance. In May this year, the Jiangxi Securities Regulatory Bureau fined Su Huafeng and Shi Zheyuan a total of 1.9 million yuan. The two held shares in a pre-IPO company through entrusted shareholding in violation of regulations, and both were signing sponsor representatives for the Xin'an Century STAR Market IPO project, which generated over 41.88 million yuan in sponsorship and underwriting fees for Western Securities. Additionally, Western Securities issued conclusions contradicting regulatory findings in its ongoing supervision of ST Nanxin, and received a verbal warning for information disclosure violations in its supervision of Dingli Technology's listing. As early as 2023, the China Securities Regulatory Commission pointed out that Western Securities had issues such as inadequate follow-up on quality control and core review opinions, excessive emphasis on scale and revenue in assessments, and ineffective internal accountability. Nearly three years on, these problems remain fundamentally unresolved, and in March this year the firm was fined 460,000 yuan for anti-money laundering violations. Industry insiders note that the root cause lies in compliance and risk control giving way to business expansion under a scale-first orientation, with assessment incentives decoupled from risk, risk control lacking substantive veto power, and internal accountability existing in name only.

The Jiangxi Securities Regulatory Bureau has imposed administrative penalties on Fisherman Information Technology for fraudulent IPO issuance on the STAR Market. The company and seven responsible individuals, including the couple Guo Gang and Liu Guihua, were fined a total of 17.9 million yuan. Investigations found that from 2020 to the first half of 2023, Fisherman Information inflated its revenue by a cumulative 37.5885 million yuan and total profit by 14.1357 million yuan through off-book fund circulation, fictitious cryptographic product transactions with no commercial substance, and premature revenue recognition. In 2022, the inflated revenue accounted for 14.62 percent of the reported revenue for that period, and from January to June 2023, the inflated profit represented 19.38 percent of the reported profit. Additionally, Liu Guihua, one of the actual controllers, failed to disclose in the prospectus that she held 1.55 million shares on behalf of others, constituting a material omission in information disclosure. In terms of penalties, the company was fined 4 million yuan, Guo Gang and Liu Guihua were each fined 4 million yuan, and the remaining senior executives and supervisors were fined a total of 5.9 million yuan. Fisherman Information had previously applied for a STAR Market IPO in December 2022, sponsored by Western Securities, with plans to raise 334 million yuan. It voluntarily withdrew the application in June 2024, but regulators have made clear that responsibility attaches upon filing and is not extinguished by withdrawal. The sponsor Western Securities may face further accountability.

Two sponsor representatives from Western Securities have been issued a regulatory warning by the Shanghai Stock Exchange for inadequate due diligence on the ST Xin'an convertible bond project. The exchange pointed out that ST Xin'an's capitalisation of research and development expenditure in 2025 had a significant impact on whether it could continue to meet the conditions for convertible bond issuance, but the sponsors failed to conduct prudent verification that fully considered the feasibility of the R&D technology, support from existing orders, and consistency of accounting policies, and the conclusions in the submitted special response documents were unclear. Previously, ST Xin'an revised its 2025 preliminary earnings estimate, adjusting its net profit attributable to the parent company after deducting non-recurring items from 73.8568 million yuan to 13.5648 million yuan, resulting in a negative cumulative net profit after deducting non-recurring items for the three years from 2023 to 2025, which meant it no longer met the issuance conditions. The sponsor representatives warned this time are Zhang Suxian and He Si. Notably, this is the second violation by Western Securities' investment banking division on the ST Xin'an project. In May this year, two other sponsor representatives were fined a total of 1.9 million yuan by the Jiangxi Bureau of the China Securities Regulatory Commission for illegally acquiring shares in the ST Xin'an IPO project.