① A rare public offering was alerted by regulation. What happened? ② Golden Seed Liquor's announcement uncovered the “lid” for asset management products under the Xinhua Fund to reduce holdings in violation of regulations; ③ Public equity disclosure and internal control were the hardest hit areas of supervision and punishment.
Financial Services Association, June 1 (Reporter Yan Jun) An announcement by the listed company Golden Seed Liquor uncovered the old news that public funds reduced their holdings two years ago in violation of regulations.
On May 31, Golden Seed Liquor announced the Shanghai Stock Exchange's “Decision on Supervisory and Warning of Xinhua Fund Management Co., Ltd.”. The announcement stated that due to a total reduction in the holdings of the two asset management products under the Xinhua Fund by 2% on August 4, 2022, there was no timely trust guarantee, and a regulatory warning was issued against the Xinhua Fund.
The disclosure of holdings reduction was more than a month late, and the Xinhua Fund was warned
The Golden Seed Liquor announcement revealed in detail the reasons why the Xinhua Fund was punished.
According to the announcement, from April 4, 2019 to September 15, 2022, Xinhua Fund's two asset management products, “Xinhua Fund - Golden Seed No. 1 Asset Management Plan” (hereinafter referred to as Golden Seed No. 1) and “Xinhua Fund - Golden Seed No. 2 Asset Management Plan” (hereinafter referred to as Golden Seed No. 2), together held more than 5% of the shares in Anhui Golden Seed Liquor.
On May 10, 2022, the company disclosed the announcement of the plan to reduce the shareholding of Xinhua Fund. According to the holdings reduction plan, Golden Seed 1 and Golden Seed 2 hold 7.8% in total. The two products plan to reduce their holdings by no more than 3.31% and 2.69%, respectively, for a total holdings reduction of no more than 6%.
As of August 4, 2022, Golden Seed 1 and Golden Seed 2 reduced their holdings by 2% in total. The Xinhua Fund did not promptly fulfill the relevant information disclosure obligations for every 1% change in the company's shares, and did not explain the relevant situation in the holdings reduction progress announcement until August 11, 2022.
The Financial Services Association reporter checked the August 11 holdings reduction plan announcement and showed that the total holdings reduction reached 2%.
Among them, the total holdings were reduced by 1.1% from May 16 to June 7, 2022, and 0.9% from June 8 to August 4. According to section 63 of the Securities Law, after an investor holds more than 5% of the listed company's shares, the listed company shall be notified and announced the day after the investor and others hold 5% of the listed company's shares, for every 1% increase or decrease in the proportion of voting shares issued by the listed company.
Compared to this requirement, Xinhua Fund's two products are acting in concert. As a shareholder holding 5% or more of the company's shares, Xinhua Fund should disclose the next day every time the shareholding ratio changes to 1%. However, Xinhua Fund did not disclose it until August 11, at least more than a month later than the regulations.
According to the regulations, the above acts violate the relevant provisions of the “Securities Law” and “Shanghai Stock Exchange Stock Listing Rules (2022 Revision)”. Therefore, the management of the Xinhua Fund was supervised and warned.
Or for the channel business, a fixed increase special account for some suppliers of Golden Seed Liquor
The Golden Seed No. 1 and Golden Seed No. 2 funds first appeared among the top ten tradable shareholders of Golden Seed Liquor's 2019 interim report. The two funds together held 7.8% of the company's shares, making them the third and fifth largest tradable shareholders respectively.
In fact, judging from the names of these two asset management products, it is not difficult to find the origin of the Golden Seed Liquor. According to the Golden Seed announcement on April 9, 2019, the two asset management plans under the Xinhua Fund were subscribed by some outstanding Goldseed dealers and others. At the time, the fixed price was 5.65 yuan, and the lockdown period was three years.
The two asset management plans under the Xinhua Fund lifted the ban on listing circulation on April 6, 2022. Coincidentally, in February 2022, after news of China Resources's shareholding was announced, the stock price leveled up, reaching a historic high of 32.87 yuan in March of that year.
The two asset management plans announced plans to reduce holdings in May 2022. Take the average stock price of 27.89 yuan from May 16 to August 5 as an example. The two asset management plans mentioned above reduced their holdings by 2% in total, reducing their holdings by 13.15 million shares, making a profit of nearly 300 million yuan.
Since then, the two asset management plans have continued to reduce their holdings. By the 2022 report, Golden Seed No. 2 had withdrawn from the top ten shareholders, and Golden Seed No. 1 also withdrew from the top ten tradable shareholders in the first half of 2023.
Public offering is not commonly punished; credit disclosure and internal control are the hardest hit areas
Public placement penalties are generally disclosed in fund annual reports. Compared with other financial institutions, public placement penalties are uncommon. The Financial Services Association reporter's incomplete statistics show that in the past two years, there have been about 22 public offering penalties every year. Among them, credit disclosure and internal control in fund operations are the two major areas with high incidence of penalties.
For example, in 2023, Ping An Fund was supervised and issued a warning letter because the managed funds did not comply with regulatory requirements by referring to external rating agencies in the bond investment process; Huafu Fund and ICBC Credit Suisse were all issued warning letters by the Beijing Securities Regulatory Bureau due to “errors in information disclosure.”
For example, in 2022, due to fluctuations in the securities market and changes in fund size, the securities investment ratio exceeded the standard and was unable to be adjusted within the specified time, and the Shenzhen Securities Regulatory Bureau took measures to issue a warning letter.
Compared with publicly funded products, CITIC disclosure of publicly funded asset management products is also a key area of punishment. Similar to the Xinhua Fund, previously Huitianfu Fund was also subject to administrative supervision measures in a warning letter by the Shanghai Securities Regulatory Bureau for not providing timely information disclosure documents to investors under one of its single asset management plans. Furthermore, many fund companies, such as Huatai Baoxing Fund, Huachen Future Fund, Fuanda Fund, and CITIC Prudential Fund, have been regulated and punished in recent years due to asset management plans.
According to the industry, after the new “National Nine Rules”, regulations severely cracked down on illegal holdings reduction. There was a precedent where Gao Lin Capital was investigated by reducing its holdings of Longji shares. Public equity asset management plans should also strictly abide by relevant requirements, such as those involving pre-disclosure obligations involving major shareholders before reducing their holdings through major transactions, and requiring the majority shareholders to jointly abide by restrictions on holdings reduction.