Behind a ¥16.98 Million Investment Banking Fine: Over 70 Brokerages Penalized in 2025, Two Individuals Hit With Fines Exceeding ¥100 Million

Another brokerage has been hit with a regulatory penalty—and this time, the price tag is hard to ignore.

On December 24, 2025, the Jiangsu Office of the China Securities Regulatory Commission (CSRC) released an administrative penalty decision targeting First Capital Securities’ (002797.SZ) wholly owned subsidiary, First Capital Securities Underwriting & Sponsorship Co., Ltd. (commonly referred to as “First Capital Investment Banking”). The decision centers on alleged failures in its ongoing supervision duties related to Hongda Xingye’s 2019 convertible bond project.

According to the penalty document, during the continuous supervision period, the investment banking unit failed to exercise due diligence, including insufficient verification of how raised funds were used and repaid. It also did not issue required verification opinions, which led to continuous supervision filings containing false statements. In addition, it did not properly fulfill its obligations to督促 (urge/correct) and report issues as required.

As a result, regulators imposed a package of measures: an order to rectify, confiscation of RMB 4.2453 million in sponsorship business income, and a fine of RMB 12.7358 million. Combined, the total financial penalty reached approximately RMB 16.98 million. Two former sponsor representatives, Fan Benyuan and Song Yao, were each fined RMB 1.5 million.

This case is not isolated. Based on incomplete statistics compiled by Time Weekly reporters, throughout 2025, the CSRC and its local offices issued more than 330 penalty notices against securities firms and responsible individuals, involving over 70 brokerages. Enforcement actions ranged from warnings and fines to regulatory letters, corrective orders, and more. By business line, brokerage operations remained the most heavily penalized area, accounting for over 30% of all cases. Meanwhile, two nine-figure (100-million-yuan-level) penalties against individuals drew significant market attention.

RMB 16.98 Million Fine: The Firm and Two Sponsor Representatives Penalized Together

The underlying issuer in this matter, Hongda Xingye, was delisted in March 2024. In June 2025, the Jiangsu CSRC office had already issued administrative penalties against Hongda Xingye and eight related individuals, with combined fines totaling RMB 57.8 million. The company’s controlling shareholder, chairman, and general manager Zhou Yifeng received a lifetime ban from the securities market, while CFO Lin Guisheng was banned for 10 years.

Following the crackdown on Hongda Xingye’s responsible parties, the spotlight shifted to the intermediary’s role—specifically, whether continuous supervision was performed properly.

Regulators concluded that First Capital Investment Banking did not adequately verify the use and repayment of raised funds, failed to publish mandated verification opinions, and issued supervision documents containing false records. It also fell short on its duty to urge corrections and report as required. The Jiangsu regulator therefore issued a rectification order and warning, confiscated the RMB 4.2453 million in sponsorship income, and levied a RMB 12.7358 million fine. Fan Benyuan and Song Yao were each given warnings and fined RMB 1.5 million.

In regulatory terms, sponsor representatives are often treated as the “front-line gatekeepers.” Here, Fan and Song were identified as the directly responsible supervising personnel for the misconduct, as both served in their roles during the continuous supervision period.

Fan Benyuan, an execution director in investment banking and a seasoned sponsor representative, reportedly took over the sponsor role in 2019, replacing the prior representative and sharing responsibility with Song Yao for subsequent supervision. Although Song left the firm in 2023 due to job changes, regulators still held him accountable because the violations were tied to the 2019–2022 supervision period when he was in post.

The size of the penalty and the “institution + individuals” combined enforcement approach make this one of the more notable brokerage cases of the year.

First Capital: Operations Stable, Compliance Strengthening Promised

In response, First Capital released an announcement on December 26, stating it had urged the subsidiary to conduct a serious review, implement concrete remediation, and comprehensively strengthen practice-quality controls. The company also emphasized that operations at both the parent and subsidiary remain normal, and that the penalty would not cause a material adverse impact on operating activities, financial condition, or debt-servicing capacity.

From a performance perspective, in the first three quarters of 2025, First Capital reported RMB 2.985 billion in operating revenue, up 24.32% year-on-year. Investment banking revenue was RMB 197 million, up 15.13%, accounting for 6.60% of total revenue. Net profit attributable to shareholders reached RMB 771 million, up 20.21%. As of the end of Q3, total assets stood at RMB 52.742 billion, an increase of 4.09% compared with the end of the prior year.

Wind data shows that in 2025, First Capital (on a consolidated basis) achieved RMB 41.75 billion in total bond underwriting—up more than 56% from RMB 26.749 billion in 2024—lifting its ranking from 46th to 37th. However, its equity underwriting activity remained limited: the subsidiary completed only one equity deal in 2025, a follow-on offering worth RMB 5.192 billion.

Over 300 Brokerage Penalties in 2025—Individual Fines Hit a Record RMB 159 Million

Zooming out, the First Capital case is one slice of a broader enforcement picture in 2025.

Time Weekly’s incomplete tally indicates that in 2025, regulators issued over 330 penalty actions involving more than 70 brokerages. In 2024, the total reached 516 penalty notices, covering 82 brokerages and over 400 responsible individuals.

By business type, brokerage and investment banking continued to dominate the list of violations.

In 2025, brokerage-related penalties totaled 102 cases, representing roughly 31.3% of all penalties. More than half pointed to issues at branch offices during client acquisition, investor suitability management, and product promotion. For example, on September 10, 2025, the Shandong CSRC office issued a warning letter to CITIC Securities (Shandong) Jinan Branch and a staff member, citing sales activity by personnel lacking fund-practitioner qualifications and promotional practices that did not use the firm’s standardized materials.

Shanghai Minglun Law Firm partner Wang Zhibin told Time Weekly that brokerage violations remain frequent largely because of the business’s inherent structure: branch networks are widespread, headcount is large, and front-line teams interact directly with investors—making lapses such as improper third-party client solicitation and weak suitability controls more likely. He also noted that brokerage compliance directly affects retail investors’ interests and the market’s basic compliance ecosystem, which is why regulators keep this area under tight scrutiny.

Investment banking also stayed firmly in the enforcement crosshairs. In 2025, regulators issued 55 investment-banking-related penalties, involving about 20 brokerages and nearly 70 sponsor representatives. Measures ranged from warnings and supervisory interviews to suspensions of business qualifications.

In terms of firm distribution, Time Weekly’s incomplete statistics show CITIC Securities and its branches received 13 penalties, while Minmetals Securities and Bohai Securities received 12 and 10, respectively. Caitong Securities, Northeast Securities, and Orient Securities each received 9.

Notably, many cases stemmed from investigations spanning multiple years.

On November 14, 2025, the Zhejiang CSRC office disclosed that an Shanghai Securities branch had multiple employees violating integrity and professional-conduct rules. The firm and the branch were issued warning letters, and four employees were summoned for regulatory talks. The conduct under review dated back to 2017–2021, reflecting a retroactive investigation window of up to eight years.

Another example: in July 2025, the CSRC issued an administrative penalty decision against Donghai Securities for its role as an independent financial adviser in Jinzhou Cihang’s 2015 major asset restructuring. Regulators determined the firm’s documents contained material omissions and false records, ordered remediation, and applied a “confiscate one, fine three” approach on business income—resulting in total penalties of RMB 60 million. Three individuals were fined a combined RMB 260,000.

Insider Trading and Illegal Stock Trading: Two Nine-Figure Individual Penalties

Cases involving insider trading and illegal securities trading also remained high-frequency enforcement areas, with 43 related penalties in 2025. Two of them reached the 100-million-yuan level for individuals.

On November 28, 2025, the Jiangsu CSRC office disclosed a case in which Chen (certain tao) allegedly used his job position to access trading information for 32 securities accounts opened by private funds and individuals at a brokerage firm. He then controlled additional accounts to conduct “convergent trading” (highly similar coordinated trading) with those portfolios. The case involved convergent purchases of 585 stocks, with convergent buy volume totaling about RMB 8.59 billion, generating profits of RMB 18.7504 million. Regulators confiscated RMB 45.1505 million in illegal gains and imposed a RMB 90.301 million fine—totaling RMB 135 million in confiscation and penalties.

Regulators noted that Chen had worked at a brokerage firm since August 1999 and had served in senior roles including vice president, and that he was a securities practitioner during the period in question.

Separately, on September 9, 2025, the CSRC published an administrative penalty decision involving Zhan Xiang, a securities practitioner accused of trading stocks through other people’s accounts while employed in the industry. The decision stated that from February 2018 to October 2024, he controlled multiple accounts to hold and trade numerous stocks. The CSRC ordered him to dispose of illegally held shares, imposed total fines of RMB 159 million, and issued a five-year market ban.

The RMB 159 million penalty was described as the largest-ever A-share fine for illegal stock trading by a securities industry practitioner.

What to Watch in 2026: Compliance Tightening Likely to Continue

Wang Zhibin added that judging from 2025’s enforcement direction, regulators may further intensify oversight in 2026 across several areas: full-chain compliance in investment banking, information disclosure and operational norms in asset management, and integrity and professional conduct among practitioners. He also expects continued strengthening of supervision over harder-to-detect misconduct such as concealed trading, improper benefit transfers, and related-party利益輸送 behaviors.

For brokerages, the most urgent task is clear: reinforce internal controls and ensure compliance standards are not only written into policy, but fully implemented down to branch offices and the last mile of business execution.