SHANGHAI: China’s stock market watchdog vowed on Friday to change the law to increase prison terms and fines for cheaters in capital markets, following a series of high-profile corporate scandals that burnt investors.
The China Securities Regulatory Commission (CSRC) is working to revise securities and criminal laws as soon as possible in a bid to raise maximum prison terms and fines, the regulator said in a statement on its website.
CSRC, which has made similar statements in the past, did not give a timetable.
Under the current securities law, a listed company that makes false disclosure is fined up to 600,000 yuan (US$87,232), while the criminal law states those who conceal or intentionally destroy accounting records can be imprisoned for up to five years and fined up to 200,000 yuan.
CSRC, which made the statement in response to criticism that the cost of cheating in capital markets is too low, said that current laws were too lenient.
CSRC also said it would severely punish negligent auditors and investment bankers and actively support compensation claims made by victims of crime.
There has been a slew of cases recently involving dishonest disclosures by China-listed companies.
Kangmei Pharmaceutical Co, which overstated cash holdings in 2017 by US$4.4 billion, faked its books for three consecutive years during 2016-2018, CSRC said in May following an investigation.
In another high-profile scandal, Kangde Xin Composite Material Group Co, a producer of high polymer materials, cooked its books between 2015 and 2018, CSRC said on July 5.
According to CSRC’s latest disclosure on Friday, the regulator has halted reviews of IPO applications for about 30 companies that hired Ruihua Certified Public Accountants.
Ruihua, auditor of Kangde Xin, is currently under investigation by the securities regulator for its role in the company’s information disclosure breaches.
There was no immediate answer from Ruihua to a telephone call from Reuters seeking comment on CSRC’s filing.