15 million yuan maximum penalty imposed! Tianfeng Securities receives consecutive regulatory fines, clearing historical burden

21st Century Business Herald Reporter Sun Yongle

On March 13, Tianfeng Securities (601162.SH) officially announced that it received the “Administrative Penalty Decision” issued by the Hubei Regulatory Bureau of the China Securities Regulatory Commission, along with three other penalty notices.

Industry insiders point out that this penalty aligns with the content of the previous “Administrative Penalty Notice,” marking the full completion of the relevant regulatory procedures.

Tianfeng Securities stated that the company sincerely accepts and resolutely implements the penalties. This signifies the thorough resolution of historical risks, solid implementation of comprehensive rectification work, stable and orderly operations, and the company is now ready to embark on a new stage of steady development.

On March 13, Tianfeng Securities announced that it received the “Administrative Penalty Decision” from the Hubei Regulatory Bureau of the China Securities Regulatory Commission due to suspected violations of information disclosure and illegal financing.

Investigation found that from 2020 to 2022, Tianfeng Securities illegally provided financing to the former largest shareholder, Contemporary Group, and failed to disclose related-party transactions with Contemporary Group as required. The group and Tianfeng Securities jointly engaged in related illegal activities, severely violating securities laws and regulations.

According to the penalty decision, Tianfeng Securities was warned and fined 15 million yuan. Former Chairman Yu Lei, Vice President and CFO Xu Xin, and several other senior executives were also warned and fined for violations, with Yu Lei and Xu Xin being subject to lifetime market bans.

Meanwhile, Tianfeng Securities also issued three other announcements, receiving three regulatory penalty documents, mainly concerning two major violations, detailed as follows:

First, the company received an administrative regulatory measure decision from the Hubei Securities Regulatory Bureau. The issues are related to a series of historical violations during the “Contemporary” period, resulting in the suspension of private fund product distribution activities for two years.

According to the administrative regulatory measure decision, the company has issues such as some employees promoting non-company-distributed financial products, illegal collaboration with Wuhan Contemporary Tianxin Wealth Investment Management Co., Ltd., illegal sales of private equity funds, reckless business decisions, inadequate control over subsidiaries and branches, and failure to effectively manage risks.

Additionally, the company also faced inaccurate disclosures in 2022 earnings forecasts, irregularities in the preparation and release of research reports, non-standard practices in investment banking projects, inadequate organizational restructuring of private fund operations, personnel management and filing issues, and violations related to the scope of property subsidiary operations.

Therefore, the Hubei Securities Regulatory Bureau decided to suspend Tianfeng Securities’ private fund product distribution activities for two years and to discipline relevant responsible personnel.

At the same time, the company’s Chairman, President, Compliance Director, and Chief Risk Officer are required to participate in regulatory interviews by 10:00 on March 19. Tianfeng Tianrui Investment Co., Ltd. was also subjected to a one-year suspension of new private fund products and issued a warning letter.

Second, the company received a pre-penalty notice and decision from the Fujian Securities Regulatory Bureau. Due to suspected illegal disclosure of shareholding changes in Yong’an Forestry, Tianfeng Securities was previously under investigation by the China Securities Regulatory Commission.

Investigation revealed that on December 31, 2021, the Quanzhou Intermediate People’s Court of Fujian Province issued an “Enforcement Ruling,” ordering Su Mouxu and Fujian Nan’an Xiongchuang Investment Center (Limited Partnership), holding a total of 41.372 million Yong’an Forestry shares and dividends, to be delivered to Tianfeng Securities to settle related debts. The ruling stated that “the above property rights transfer upon delivery of this ruling to the applicant for enforcement.”

On the same day, Tianfeng Securities, as the enforcement applicant, received the “Enforcement Ruling,” holding 12.29% of Yong’an Forestry’s total shares. However, the company failed to promptly disclose the change in Yong’an Forestry’s shareholding information.

According to the latest penalty decision, the Fujian Securities Regulatory Bureau ordered the company to correct the violations, issued a warning, and fined 4 million yuan. The company’s President, Wang Linjing, was also warned and fined 1.4 million yuan.

Tianfeng Securities stated that the company does not involve other risk warnings or major illegal delisting situations, and current operations are normal.

It is understood that this penalty is part of a comprehensive cleanup of historical issues caused during the period of private shareholders.

Since the regulatory investigation was initiated, Tianfeng Securities has actively cooperated, clarified facts, and assumed responsibility. With the formal issuance of the administrative penalty decision, all related regulatory procedures are complete, and the long-standing burdens restricting the company’s development have been thoroughly cleared, severing ties with past risks and paving the way for high-quality growth.

According to 21st Century Business Herald, since the state-owned assets took control, Tianfeng Securities has focused on governance restructuring, systematically rebuilding its compliance and risk control systems. Specific measures include strengthening the Party Committee’s research, improving the “Three Major and One Large” decision-making mechanism; establishing a compliance review system covering all business lines; enhancing subsidiary management; strengthening compliance culture; and ensuring all staff share responsibility for compliance, building a solid defense from systems, processes, and culture.

Tianfeng Securities disclosed that all tasks have been completed and implemented effectively, significantly improving the company’s compliance operation level.

Market analysts point out that this incident is an important milestone in Tianfeng Securities’ risk clearance and has notable industry demonstration significance. Regulatory authorities have imposed penalties in accordance with laws and regulations, with a clear focus on “pursuing the first wrongdoers and punishing accomplices,” demonstrating a firm commitment to strengthening securities regulation and cracking down on illegal activities, further emphasizing the rigid requirements for industry compliance and standardized operation.

Meanwhile, Tianfeng Securities’ path of governance reconstruction and risk clearance, supported by state ownership, provides practical reference for similar institutions in the industry to resolve historical burdens and improve governance systems, promoting a shift from passive rectification to proactive compliance, and from scale expansion to quality improvement.

A securities analyst stated that risk clearance has opened a new cycle for valuation recovery for Tianfeng Securities, and its investment value is expected to regain market attention.

With the full support of its controlling shareholder, Hongtai Group, Tianfeng Securities has achieved significant progress in restoring performance, strengthening capital, and serving the real economy. The company expects to achieve a net profit attributable to the parent of 125 million to 185 million yuan in 2025, successfully turning losses into profits, marking its best performance in recent two years.

By 2025, Tianfeng Securities plans to complete a 4 billion yuan private placement, significantly enhancing its capital strength. Under the main compliance-driven approach, the company will focus on its core business, continuously improve its service to the real economy, and has provided nearly 930 billion yuan in financing to the real economy over the past three years.

Tianfeng Securities stated that looking ahead, it will take this resolution of historical risks as a new starting point, adhere to the core principles of compliance and steady development, and continuously improve corporate governance, compliance, risk control, and professional service levels.

“The company will focus on its main responsibilities, actively integrate into the construction of Hubei’s strategic hub, accelerate the development of financial support for high-quality growth in Hubei, and contribute Tianfeng’s strength to Hubei’s central rise,” Tianfeng Securities said.