(Yicai Global) July 19 -- In the three years since the simpler and quicker registration-based reform for initial public offerings on the Chinese mainland began, a number of intermediary companies such as brokerages and investment banks have been penalized for failing to perform their duties diligently.

Thirty-seven brokerages were fined 60 times from the second half of 2019 to the first half of 2022, according to the latest data from the China Securities Regulatory Commission. Most of the violations had to do with IPO underwriting, sponsoring as well as mergers and acquisitions.

The registration-based system, which was introduced at the same time as the launch of the Shanghai Stock Exchange’s Nasdaq-style Star Market in July 2019, allows firms to list much more quickly than the approval-based model by regulators that can take months, even years. It also generates a great deal of work for third-party agencies such as issuers, sponsors, underwriters, accounting companies, law firms and especially securities companies.

All these intermediaries must have a deep understanding of the role of the watchdog, said CSRC Chairman Yi Huiman. The CSRC will continue to clarify the responsibilities of various entities and strive to form a mechanism in which each party performs its own duties, assumes its own responsibilities and restricts one another, he added.

A number of leading securities firms, including China International Capital, CITIC Securities, Huatai United Securities and China Securities, fell foul of the regulator, some of them for serious offences.

GF Securities had its sponsorship license suspended for six months and that for bond underwriting withdrawn for 12 months for its role in Kangmei Pharmaceutical’s huge financial fraud. Fourteen people at the Guangdong-based brokerage were held directly responsible and some less heavily involved were also punished, including having their remuneration for the project confiscated.

Haitong Securities was fined CNY4 million (USD593,200) in October last year for failing in its role as independent financial advisor to Aurora Optoelectronics’ major asset restructuring and fundraising.

Smaller brokerages, such as Northeast Securities, Yuekai Securities, Hongxin Securities, as well as Goldstate Securities, also were penalized.

Editors: Tang Shihua, Kim Taylor