(Yicai Global) Dec. 30 -- Chinese stock tricksters are set to pay a steeper price for their swindles as new amendments to their country's securities law set to take effect on March 1 will raise the penalty for fraud in an initial public offering to up to CNY20 million (USD2.9 million) from its current CNY300,000 (USD43,000) to CNY600,000.

For 'already issued securities,' the standard for an issuer's fine will rise to between 10 percent and 100 percent of the amount of illegally raised funds from its present 1 percent to 5 percent.

These revisions to China's 20-year-old securities law are long overdue and come in response to a virtual mudslide in recent years of outright stock fraud scams and Bernie Madoff-style Ponzi schemes masquerading as investment funds.

The country's securities regime has been relatively lenient up to now. The largest penalty the CSRC has levied to date was the then-maximum CNY600,000 (USD87,441) fine imposed against Dalian Zoneco Group, a marine aquaculture firm which fiddled its already-fishy financial data for several years, as well as a CNY300,000 one against its president, who was also barred from China's stock market for life in December last year. This sort of information disclosure violation will now carry a fine of up to CNY10 million.

The changes will also institute a registration-based IPO system to better protect investors, Cheng Hehong, director of the law division of the China Securities Regulatory Commission, said at a Dec. 28 press conference. This approach is the one that the Shanghai Stock Exchange's Nasdaq-style STAR Market has been piloting for five months now.

The amended statute also pioneers a civil litigation regime that enables investors to file class action lawsuits against stock market wrongdoers through agents.

Editors: Zhang Yushuo, Ben Armour