Violation of IPO regulations: Billion-dollar private equity firm Xitai Investment receives regulatory warning

Recently, the Shanghai Stock Exchange issued a decision on regulatory warning against Shanghai Xitai Investment Management Co., Ltd. (hereinafter referred to as “Xitai Investment”). It was found that, in its participation in the offline inquiry process for the initial public offering of securities, Xitai Investment had two violations: first, its internal rules were not complete and its internal control implementation was not in place. The internal rules related to the inquiry were not健全; there were gaps in building systems for conducting internal compliance checks and suitability self-assessments, submitting pricing basis processes, and establishing risk performance evaluation indicators for first-issue securities. Important operations related to the inquiry lacked review records; communications equipment was not effectively controlled; training records for inquiry-related business were not retained; and there were deficiencies in the execution of internal controls. Second, its internal research was insufficient and its decision-making process was not standardized. The company’s internal research reports were not comprehensive; the valuation analysis section lacked a rigorous and complete step-by-step derivation process; and there was no report approval process. Ultimately, the final pricing logic derivation process was missing, and the pricing basis kept for record review could not sufficiently support the final quotation results. (People’s Finance News)