Regulators take action to strengthen the management of public statements! Involving securities analysts, fund managers

According to reports from Securities China, recently, many local securities regulatory bureaus have imposed regulatory requirements on securities firms and other financial institutions, aiming to strengthen the management of public statements, especially regarding the external communications of chief economists, securities analysts, fund managers, and other practitioners. According to multiple sources, some securities research institutions have issued internal documents to strengthen the management of analysts, requiring them to fully standardize their words and actions, strictly adhere to professional ethics, emphasize that research reports are the only standard for opinions, avoid making outrageous statements for attention, refrain from relaxing standards to attract clients or follow trends, and not to test regulatory red lines with a mentality of luck. In addition, some securities research personnel have indicated that the company's compliance has recently reiterated the prohibition of practitioners providing clients with research meeting minutes of listed companies in any form; relevant minutes can only be archived internally or used as material for writing research reports. It is reported that some securities firms have internal requirements to effectively strengthen personnel management, especially for key employees such as chief economists, securities analysts, and fund managers, ensuring comprehensive coverage without blind spots, and strictly managing irresponsible statements that may lead to negative public opinion. Moreover, there are strict requirements for prior approval of employees' attendance at various activities, meetings, forums, roadshows, discussions, and other social activities and the content of their statements, prohibiting the dissemination or transmission of unverified or illegally sourced data and information. Securities China has observed that in the past two years, regulators have continuously tightened the norms for compliance management of research institutions, involving the management of chief economists, research report management, research meeting minutes management, and the public or unauthorized publication of securities analysis opinions by analysts. Since 2023, there have been dozens of penalties for securities firms in the research field. For example, in February 2022, the China Securities Association (hereinafter referred to as "CSRC") issued a notice titled "Notice on Strengthening Self-Discipline Management of Chief Economists in Industry Institutions" (referred to as "Notice"). The "Notice" proposed that institutions should "carefully appoint chief economists," who should be "formal employees of the company" and "consciously accept the self-discipline management of the association." The release of research opinions to the public must comply with the provisions of the "Professional Standards for Publishing Securities Research Reports." The "Notice" also mentioned that companies should guide chief economists to better serve the capital market and national economic construction, actively promote the industry culture of "compliance, integrity, professionalism, and prudence," and maintain responsible communication, playing a positive role in promoting and interpreting the Party and national policies and reasonably guiding market expectations. The performance of chief economists in practicing the core values of industry culture will be included in the evaluation of securities companies' cultural construction practices. In late August 2022, the CSRC emphasized relevant self-discipline management requirements, aiming to strengthen the self-discipline management of the business of publishing securities research reports and the participation of securities analysts in external evaluations, standardizing the professional behavior of securities analysts, preventing conflicts of interest, and promoting the healthy development of securities research business. It reiterated that research meeting minutes are for internal archiving or writing research reports only and must not be published externally or provided to clients. In May 2023, regulatory authorities issued a notice to securities firms regarding the "double random" on-site inspection of the business of publishing securities research reports The report shows that the regulatory authorities noted three typical issues during the on-site inspection of special work, mainly reflected in: some companies' internal control systems have not been updated and adjusted in a timely manner according to regulatory requirements; insufficient effectiveness in the execution of internal control systems; and a lack of prudence in research report production, with individual employees privately publishing securities analysis opinions. Subsequently, more than forty "penalties" appeared in quick succession, all pointing to the weak internal control of related brokerage firms' research report business and the weak compliance awareness of analysts and other practitioners. According to a reporter from Securities China, since the "penalty wave" for research report business, many research institutes have been vigorously recruiting quality control personnel to strengthen the quality control of research reports. At the same time, many brokerage firms have imposed strict restrictions on analysts' public statements or privately publishing securities analysis opinions. In May 2024, the China Securities Association officially released the "Guidelines for Securities Companies Providing Investment Value Research Reports," further standardizing the formation process of pricing reports and fully leveraging the important reference role of pricing reports in issuance pricing. Author of this article: Yun Zhongyue, Source: Securities China, Original Title: "Regulatory Action to Strengthen Management of Public Statements! Involving Brokerage Analysts, Fund Managers..." Risk Warning and Disclaimer The market has risks, and investment should be cautious. 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