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

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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 result is consistent 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 rectification work, stable and orderly operations, and the company is now ready to enter a new stage of steady development.

A maximum fine of 15 million yuan has been imposed

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

According to investigations, between 2020 and 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.

Based on the penalty decision, Tianfeng Securities was warned and fined 15 million yuan. Several senior executives, including then-Chairman Yu Lei and Vice President and CFO Xu Xin, were also warned and fined for illegal activities, with Yu Lei and Xu Xin being permanently barred from the market.

Meanwhile, Tianfeng Securities also issued three other announcements, receiving three regulatory penalty documents, mainly involving two major illegal facts, 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, and as a result, the company will be suspended from selling private equity financial products 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.

In addition, the company also faced issues such as inaccurate disclosure of 2022 earnings forecasts, irregular production and release of research reports, non-standard practices in investment banking projects, incomplete organizational restructuring of private equity business, irregular personnel management and filing, and violations related to the scope of operations of property subsidiaries.

Therefore, the Hubei Securities Regulatory Bureau decided to suspend the company’s private equity product distribution business for two years and to discipline relevant personnel.

At the same time, the company’s Chairman, President, Compliance Director, and Chief Risk Officer are required to undergo regulatory interviews by 10 a.m. on March 19. Tianfeng Tianrui Investment Co., Ltd. was also subject to a one-year suspension of establishing new private equity funds 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 information related to the shareholding change of Yongan Forest in Fujian Province, Tianfeng Securities was previously under investigation by the China Securities Regulatory Commission.

Investigation found that on December 31, 2021, the Quanzhou Intermediate People’s Court of Fujian Province issued an “Enforcement Ruling,” ordering the debtor Su Mouxu and Fujian Nan’an Xiongchuang Investment Center (Limited Partnership), holding a total of 41.372 million shares of Yongan Forest and dividends, to be transferred to Tianfeng Securities to settle related debts, with the statement that “the above property rights transfer from the date this ruling is served to the applicant for enforcement.”

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

According to the latest penalty decision, the Fujian Securities Regulatory Bureau ordered the company to correct the issue, issued a warning, and fined 4 million yuan. The company’s President, Wang Linjing, was 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 its current operations are normal.

Thorough cleanup of historical issues

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

Tianfeng Securities said that since the regulatory investigation began, the company has actively cooperated, clarified facts, and taken responsibility. With the formal issuance of the administrative penalty decision, all related regulatory procedures have been completed, and the long-standing burdens restricting the company’s development have been thoroughly cleared, cutting off past risks and paving the way for high-quality development.

According to 21st Century Business Herald, since the state-owned capital took control, Tianfeng Securities has focused on governance restructuring, systematically reconstructing 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 consolidating responsibilities for all staff, building a solid defense from systems, processes, and culture.

Tianfeng Securities revealed that, so far, all tasks have been completed on schedule and have taken effect, significantly improving the company’s compliance operation level.

Market analysts believe that this incident is an important milestone in Tianfeng Securities’ risk clearance and has clear industry demonstration significance. Regulatory authorities have acted lawfully and in accordance with regulations, with a clear focus on “pursuing the first wrongdoers and punishing accomplices,” demonstrating a firm commitment to strengthening supervision of securities institutions and cracking down on illegal activities. It further clarifies the industry’s strict requirements for compliant operation and standardized management.

Meanwhile, Tianfeng Securities’ path of governance reconstruction and risk clearance, supported by state-owned control, 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 said 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 notable results 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 will have completed a 4 billion yuan private placement, significantly enhancing its capital strength. Under the main theme of compliant operation, 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 the resolution of this historical risk as a new starting point, adhere to the core principles of compliant operation 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 overall construction of Hubei’s financial hub, accelerate building a financial support point for high-quality development in Hubei, and contribute Tianfeng strength to the rise of central China,” Tianfeng Securities said.