China regulator vows to clamp down harder on financial fraud

China regulator vows to clamp down harder on financial fraud

FILE PHOTO: A Chinese flag flutters outside the China Securities Regulatory Commission (CSRC) building on the Financial Street in Beijing, China February 8, 2024. REUTERS/Florence Lo/File Photo

China‘s securities regulator vowed on Friday to clamp down harder on financial fraud, saying it is pushing for harsher punishment against lawbreakers as it seeks to revive confidence in the country’s struggling stock markets.

The China Securities Regulatory Commission (CSRC) and five other government agencies jointly published a set of guidelines against capital markets cheating, their latest efforts to address a deep-rooted issue that has plagued the world’s second-biggest stock market.

The statement, which promised coordinated crackdowns against corporate fraudsters and their accomplices, comes as regulators are investigating the role of PricewaterhouseCoopers (PwC) as the auditor of China Evergrande Group, whose main China unit was found cheating.

“Financial fraud seriously disturbs capital market order and shakes investor confidence,” the CSRC said in the joint statement.

Regulators will “go after chief evils”, “punish accomplices”, and make coordinated, systemic and comprehensive efforts against fraud, it said.

As part of the efforts to head off misbehaviour, the CSRC said it has been working to revise laws toward harsher punishment.

For example, laws have been revised to fine a company up to 10 million yuan ($1.38 million) for dishonest disclosures, compared with 600,000 yuan ($82,568) previously, the watchdog said.

Meanwhile, those who violate disclosure rules could be imprisoned for up to 10 years, compared with three years previously. Intermediaries who publish false documents can also be subject to 10-year imprisonment, the CSRC said.

Reuters

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