China has adopted an amendment to its criminal law to intensify
crackdowns on securities and futures crimes, aiming to provide a
stronger legal guarantee for the country's ongoing capital market reform
and promote healthy development of the sector.
The criminal acts of fraudulently issuing securities and disclosing
information, providing false supporting documents and manipulating the
market will attract tougher punishment, according to Amendment XI to the
Criminal Law adopted at a Standing Committee session of the National
People's Congress, China's top legislature.
The move came amid new problems and situations disrupting market
order along with the development of the capital market, said the China
Securities Regulatory Commission, the country's securities regulator.
Describing the amendment as an important legislation for the capital
market, the commission said that the move demonstrated the country's
determination to exercise zero tolerance for all kinds of law-breaking
behaviors and was of far-reaching significance to the reform of the
registration-based initial public offering system.
Under the amendment, the maximum sentence for fraudulent securities
issuances will be raised to 15 years from five, while the maximum prison
term for fraudulent information disclosures will be increased to 10
years, with the cap on fines to be abolished.
Commenting on the previous five-year maximum imprisonment for
fraudulent securities behaviors, Liu Pengpeng, an official with the
Hangzhou municipal public security bureau, said that the earlier
punishment was obviously too lenient to prevent and deter crimes.
The amendment also stipulates heavier penalties against controlling
shareholders and actual controllers. Behaviors such as organizing
fraudulent securities issuances or concealing relevant matters will also
be subject to the amendment.
Intermediaries such as lawyers and accountants who provide false
supporting documents shall be sentenced to imprisonment of up to 10
years, it says.
Chen Li, a chief economist with Chuancai Securities, highlighted the
role of legal framework in improving listing and trading mechanisms,
saying that they laid a solid foundation for the full rollout of
registration-based IPO system featuring information disclosure.
For the next step, the CSRC vowed all-out efforts to deter securities
and futures crimes, protect the legitimate rights and interests of
investors, as well as ensure the steady and sound development of the
China seeks to fine-tune its modern financial supervision system and
improve transparency and the rule of law in regulation, according to the
proposals for formulating the 14th Five-Year Plan for National Economic
and Social Development and the Long-Range Objectives Through the Year