CSRC Orders Hithink RoyalFlush to Take Corrective Action After Selling Funds Illegally
Liao Shumin
DATE:  Nov 01 2017
/ SOURCE:  Yicai
CSRC Orders Hithink RoyalFlush to Take Corrective Action After Selling Funds Illegally CSRC Orders Hithink RoyalFlush to Take Corrective Action After Selling Funds Illegally

(Yicai Global) Nov. 1 -- The Zhejiang bureau of the China Securities Regulatory Commission (CSRC) has ordered Hithink RoyalFlush Fund Sales Co., a subsidiary of financial information services provider Hithink RoyalFlush Information Network Co. [SHE:300033], to make corrective measures after illegally giving away shares to promote fund sales during the May 18 wealth management festival.

Other fund sellers are also suspected of violating the law. With performance appraisals looming at the end of the third quarter, many third-party sales companies adopted aggressive sales promotions, such as offering to double customers' returns, Shenzhen Economic Daily quoted an insider as saying. This was a disguised way of giving away fund shares to boost sales.

Some companies are suspected of guaranteeing returns when selling some products. The insider suggests a Shanghai-based fund company could be next in line for regulatory punishment.

Stock fund sales have been declining this year, with money funds becoming the only bright spot for growth. Profits at fund sales companies have fallen significantly, leading to the firms trying to worm their way around the ban on sales and attract more investors.

Hithink RoyalFlush's third-quarter financials show its net profit dived 48.47 percent on the year to CNY180 million (USD27.21 million) in the first three quarters. The main reason behind the fall is that domestic capital market trading moved within a narrow range, and investors' demand for financial information services has not recovered.

East Money Information Co. [SHE:300059], the parent of the number one fund sales platform in China, 1234567.com, saw net profit for the first nine months dive 20.42 percent to CNY458 million.

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Keywords:   Hithink RoyalFlush,REGULATION,Legal,Fund Sales