Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Cracking Down on Illegal Securities Activities in accordance with the Law", and issued a circular requiring all regions and departments to seriously implement it in light of actual conditions.

The main contents of the "Opinions on Cracking Down on Illegal Securities Activities in accordance with the Law" are as follows.

Cracking down on illegal securities activities is an important guarantee for maintaining the order of the capital market and effectively playing the function of the capital market hub. Since the 18th National Congress of the Communist Party of China, all relevant parties have conscientiously implemented the decision-making and deployment of the Party Central Committee and the State Council, solidly promoted the construction of the capital market law enforcement and judicial system, cracked down on illegal activities in the capital market in accordance with the law, safeguarded the legitimate rights and interests of investors, and achieved positive results. At the same time, under the background of profound changes in the economic and financial environment and the deepening of capital market reform and opening up, illegal acts in the capital market are still relatively prominent, the difficulty of investigating and handling cases has increased, and relevant law enforcement and judicial work are facing new situations and challenges. In order to further promote the high-quality development of the capital market, the following opinions are hereby put forward on cracking down on illegal securities activities in accordance with the law.

1. General requirements

(1) Guiding ideology. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 19th CPC National Congress and the 2nd, 3rd, 4th and 5th Plenary Sessions of the 19th CPC Central Committee, adhere to the direction of marketization and rule of law, adhere to the establishment of systems, non-intervention and zero tolerance, strengthen the construction of the capital market infrastructure system, improve the institutional mechanism for cracking down on illegal securities activities in accordance with the law, improve the efficiency of law enforcement and justice, effectively prevent and resolve major risks, and provide strong support for accelerating the construction of a standardized, transparent, open, dynamic and resilient capital market.

(2) Principles of work

– Adhere to the requirement of zero tolerance. Strictly investigate and deal with securities violations and crimes in accordance with the law, increase the intensity of investigation and handling of major and important cases, strengthen creditworthiness restraint and punishment, and strengthen the deterrent effect.

– Upholding the principle of rule of law. Follow the principles of openness, fairness and justice, adhere to strict law enforcement and impartial administration of justice, unify standards and procedures, improve professionalism, enhance transparency, and continuously enhance public credibility.

– Persisting in overall planning and coordination. Strengthen the coordination of work between securities and futures regulatory authorities and public security, judicial, market supervision and other departments and relevant localities, and form a joint force to efficiently crack down on illegal securities activities.

——Adhere to bottom-line thinking. Combine cracking down on illegal securities activities in accordance with the law with effectively preventing and resolving risks, maintaining national security and social stability, strengthen risk investigation in key areas, strengthen risk prevention and control at the source, and strictly prevent risk superimposed resonance, amplification and upgrading.

(2022) Main objectives. By 2025, important progress will be made in the construction of the legal liability system for illegal crimes in the capital market, the law enforcement and judicial system and coordination and cooperation mechanism for cracking down on illegal securities activities in accordance with the law will be initially established, the cost of securities violations and crimes will be significantly increased, the frequent occurrence of major illegal and criminal cases will be effectively curbed, the channels for remedy of investors' rights will be smoother, and the order of the capital market will be significantly improved. By <>, the capital market legal system will be more scientific and complete, the judicial system of securities law enforcement with Chinese characteristics will be more sound, the judicial transparency, standardization and credibility of securities law enforcement will be significantly improved, the connection between administrative law enforcement and criminal justice will be efficient and smooth, and a good capital market ecology that respects the law and is trustworthy, standardized and transparent, open and inclusive will be fully formed.

2. Improve the system of legal responsibility for violations and crimes in the capital market

(4) Improve the securities legislative mechanism. Make full use of legal amendments, legal interpretations, authorization decisions and other forms to improve the efficiency of legislation in the securities field and enhance the timeliness of legal supply.

(5) Increase the intensity of criminal punishment. Implement the Criminal Law Amendment (11), simultaneously revise the standards for filing and prosecuting criminal cases, and improve relevant criminal justice interpretations and judicial policies.

(6) Improve the administrative legal system. Implement the newly revised Securities Law, accelerate the formulation and revision of supporting laws and regulations such as the Regulations on the Supervision and Administration of Listed Companies, the Regulations on the Supervision and Administration of Securities Companies, the Regulations on the Supervision and Administration of the New Third Board Market, and the Measures for the Implementation of the Commitments of Parties to Administrative Law Enforcement of Securities and Futures, and significantly increase the cost of violations of laws and regulations. Accelerate the formulation of the Futures Law and make up for the shortcomings of the futures market supervision and law enforcement system.

(7) Complete the civil compensation system. We should step up efforts to promote the implementation of the litigation system for representatives in securities disputes. Revise judicial interpretations on civil compensation arising from false statements, and abolish the pre-litigation procedures for civil compensation. Carry out pilot arbitration systems in the securities industry.

(8) Strengthen market restraint mechanisms. Promote the reform of the delisting system, strengthen the supervision of delisting, strictly implement the compulsory delisting system, study and improve the supervision and risk disposal system of delisted companies, and improve the virtuous cycle mechanism for the survival of the fittest for listed companies. Strengthen supervision over the issuance and operation of securities investment funds, lawfully implement market exits for fund managers that seriously violate laws and regulations, do a good job in handling risks, and protect the legitimate interests of fund holders. Improve the self-regulatory system for trading venues, industry associations, etc. on securities violations and violations.

3. Establish and improve the law enforcement and judicial system and mechanism for cracking down on illegal securities activities in accordance with the law

(9) Establish coordination mechanisms for cracking down on illegal activities in the capital market. Establish a coordination working group to combat illegal activities in the capital market, increase coordination of major cases, improve information sharing mechanisms, promote the formulation of important rules, and coordinate the resolution of major issues.

(10) Improve institutional mechanisms for the investigation of securities cases. Further give play to the institutional advantages of the Securities Crime Investigation Bureau of the Ministry of Public Security stationed in the China Securities Regulatory Commission, and improve administrative criminal law enforcement coordination mechanisms in areas such as lead research and judgment, data sharing, intelligence guidance and investigation, and coordinated case handling. Further optimize the allocation of resources for the Ministry of Public Security's securities crime investigation and preparation, and strengthen the construction of front-line investigation forces.

(11) Improve the procuratorial system and mechanism for securities cases. According to the number of cases, staffing, etc., study the formation of financial crime handling teams within the procuratorial organs. Explore the establishment of a working mechanism for stationing procurators in the China Securities Regulatory Commission, and strengthen coordination and cooperation between the Supreme People's Procuratorate, the China Securities Regulatory Commission and the Ministry of Public Security by participating in case lead meetings, discussion, research, and judgment, and carrying out crime prevention. Strengthen the professionalization of procuratorial teams in the securities field. When a case of suspected major crime is transferred to the public security organ, a copy is simultaneously sent to the procuratorial organ.

(12) Improve institutional mechanisms for adjudicating securities cases. Make full use of existing trial resources, strengthen the construction of financial trial work in Beijing, Shenzhen and other places where securities trading venues are located, and explore and coordinate the jurisdiction and trial of criminal, administrative, and civil cases in the field of securities and futures. Deepen the reform of specialized financial trials, and strengthen the professional construction of financial trial teams. Implement the hierarchical jurisdiction of intermediate courts and procuratorates at the same level to handle first-instance cases of securities crimes. Increase the enforcement of administrative punishments and judicial judgments. Establish a system of expert consultation and a special mechanism for professionals to serve as people's assessors.

(13) Strengthen the establishment of case-handling and trial bases. Establish bases for handling securities crimes and adjudicating securities crimes in public security organs, procuratorial organs and judicial organs in some cities such as securities trading venues and futures exchanges. Strengthen the placement of cases in securities crime handling bases, and the corresponding procuratorates and courts are respectively responsible for initiating public prosecutions and trials, and appropriately centralize jurisdiction over securities crime cases in accordance with the law through methods such as jurisdiction over the place where the crime was committed or designated jurisdiction.

(14) Strengthen local territorial responsibility. Strengthen information exchange and law enforcement cooperation between the CSRC and local governments and relevant departments, study the establishment of an internal notification system for major illegal cases in the capital market, effectively prevent and restrain local protection and other obstacles and interference that may be encountered in handling cases, and promote efficient investigation and handling of cases. On the premise of adhering to the premise that financial management is mainly the power of the central government, strengthen the responsibility for territorial risk disposal. Local governments should regulate all kinds of regional trading venues, crack down on all kinds of illegal securities and futures activities in accordance with the law, do a good job in preventing and handling financial risks in the region, and maintain social stability.

4. Strengthen the punishment of major securities violations and crimes and law enforcement in key areas

(15) Strictly investigate and handle major and important cases in accordance with law. Adhere to categorical supervision and precise crackdowns, and comprehensively improve the quality and efficiency of investigation and handling of major securities violations. Strictly and expeditiously investigate and punish major illegal cases such as fraudulent issuance, false statements, market manipulation, insider trading, trading using undisclosed information, and fabrication and dissemination of false information in accordance with law. For acts that seriously infringe on the interests of listed companies, such as capital appropriation and illegal guarantees, it is necessary to seriously investigate and recover compensation in accordance with the law, and rectify within a time limit. Increase the degree of accountability for securities violations by relevant responsible persons, such as controlling shareholders, actual controllers, directors, supervisors, and senior management of securities issuers. Strengthen the supervision of intermediaries, and where there are illegal securities acts, seriously pursue the responsibility of the institution and its practitioners in accordance with law, and impose heavier punishments on illegal acts such as participating in and assisting in financial fraud. Accelerate efforts such as investigations, punishments, and transfers of relevant cases. The application of probation is strictly controlled in accordance with the law.

(16) Strictly crack down on illegal securities activities in accordance with law. Strengthen coordination and cooperation between market supervision, public security and other departments and the China Securities Regulatory Commission, improve cross-departmental coordination mechanisms, resolutely ban illegal securities business institutions, resolutely clean up illegal securities business, and resolutely crack down on illegal securities investment consulting and other activities. Strengthen the monitoring of over-the-counter capital allocation, and resolutely crack down on large-scale and systematic off-market capital allocation activities in accordance with the law. Strictly verify the legality of the source of securities investment funds and strictly control the leverage ratio. Strengthen the connection between administrative handling and judicial adjudication of cases involving local trading venues, and effectively prevent regional financial risks.

(17) Strengthen unified law enforcement in the bond market. Strengthen unified law enforcement of all kinds of illegal acts in the bond market, focusing on cracking down on illegal acts such as fraudulent issuance of bonds, fraudulent information disclosure, and failure of intermediaries to exercise due diligence. Continuously optimize the coordination mechanism of bond market supervision.

(18) Strengthen legal responsibility for illegal private placements. Intensify criminal crackdowns on illegal fundraising in the private equity sector, and embezzlement or misappropriation of fund assets by private equity fund managers and their practitioners. Accelerate the formulation of interim regulations on the management of private equity investment funds, and implement differentiated supervision and industry self-discipline for venture capital enterprises and venture capital management enterprises.

5. Further strengthen cross-border regulatory law enforcement and judicial coordination

(19) Strengthen cross-border regulatory cooperation. Improve relevant laws and regulations such as data security, cross-border data flow, and management of information involving secrets. We should speed up the revision of the provisions on strengthening confidentiality and file management related to the issuance of securities and listing overseas, and consolidate the main responsibility for information security of overseas listed companies. Strengthen the standardized management of cross-border information provision mechanisms and processes. Adhere to the principle of law and reciprocity, and further deepen cross-border audit supervision cooperation. Explore effective ways and means to strengthen international securities enforcement cooperation, actively participate in international financial governance, and promote the establishment of law enforcement alliances to combat cross-border securities violations and crimes.

(20) Strengthen the supervision of Chinese concept stocks. Effectively take measures to respond to risks and emergencies of Chinese concept stock companies, and promote the construction of relevant regulatory systems. Revise the special provisions of the State Council on the overseas offering and listing of shares by joint stock limited companies, clarify the responsibilities of domestic industry supervisors and regulatory departments, and strengthen cross-departmental regulatory coordination.

(21) Establish and complete systems for the extraterritorial application of capital market laws. We should speed up the formulation of judicial interpretations and supporting rules for the extraterritorial application of the Securities Law, refine the specific conditions for the extraterritorial application of the law, and clarify matters such as law enforcement procedures and the effect of evidence. Strengthen foreign-related adjudication work in the capital market, and promote the mutual recognition and enforcement of judicial judgments between foreign countries, regions and China.

6. Strive to improve the judicial capacity and professional level of securities law enforcement

(22) Enhance securities law enforcement capabilities. Strengthen securities law enforcement forces, optimize the setup of securities inspection law enforcement agencies, and promote the improvement of securities law enforcement systems and mechanisms with Chinese characteristics that meet the needs of capital market development. Give full play to the function of the commitment system for parties to securities and futures administrative law enforcement. Improve the reward system for reporting illegal securities leads, and strengthen the establishment of platforms for accepting reports of illegal leads.

(23) Enrich securities law enforcement methods. Effectively use big data, artificial intelligence, blockchain and other technologies to establish a monitoring and early warning system for the securities and futures market, build a new model of modern supervision and law enforcement supported by science and technology, improve the efficiency of regulatory law enforcement, strengthen the investigation and early warning of serious illegal hidden dangers, and achieve effective prevention, timely detection and precise crackdown.

(24) Strictly enforce the law and administer justice fairly. Firmly establish awareness of rights and responsibilities, evidence, and procedures, and truly increase the professionalism, normativeness, authority, and credibility of law enforcement and justice. Strengthen uniform law enforcement, draft standards for discretion in administrative punishments, and standardize law enforcement conduct. Give play to the role of reconsideration supervision, litigation supervision and procuratorial supervision, strengthen the regulation and supervision of regulatory law enforcement agencies, resolutely correct irregularities in law enforcement and judicial work, and create a fair and just legal environment for the development of the capital market.

7. Strengthen the establishment of a credit system in the capital market

(25) Consolidate the institutional foundation for the establishment of creditworthiness in the capital market. Add special provisions for the establishment of creditworthiness to relevant laws and regulations, establish systems for the duties of entities recording creditworthiness in the capital market, clarify the conditions, obligations, and responsibilities for creditworthiness of market participants, and lawfully carry out punishments for untrustworthiness in the capital market and incentives for trustworthiness.

(26) Establish and complete credit pledge systems. Establish a credit commitment system for administrative licensing in the capital market, clarifying the scope of applicable entities and licensing matters. Include credit commitments and their performance in credit records as an important basis for supervision during and after the event. For parties who seriously violate their commitments, revoke relevant administrative licenses in accordance with law.

(27) Strengthen creditworthiness regulation of the capital market. Establish and complete nationwide uniform capital market creditworthiness archives, comprehensively recording creditworthiness information on capital market participants. Complete mechanisms for sharing creditworthiness information, increasing the force of information aggregation, inquiries, and publicity. Include relevant information in the national credit information sharing platform and the "Credit China" website, forming a pattern of creditworthiness in the capital market in which all parties jointly build, govern and share.

8. Strengthen organizational safeguards and oversight accountability

(28) Strengthen organizational leadership. All regions and departments should attach great importance to the law enforcement and judicial work of the capital market, effectively unify their thinking and actions with the decision-making and deployment of the Party Central Committee and the State Council, clarify the division of responsibilities, strengthen work coordination, implement work responsibilities, and ensure that all tasks are implemented.

(29) Strengthen the guidance of public opinion. Do a good job of three-dimensional news and public opinion work to crack down on illegal securities activities, strengthen law enforcement publicity on key cases through multiple channels and platforms, give full play to the warning and education role of typical case investigations, send a clear signal of zero tolerance to the market, and promote the formation of a good capital market ecology that respects the law and is trustworthy.

(30) Strengthen oversight and accountability. Persist in administering the party strictly in an all-round way, and resolutely implement the requirements for deepening anti-corruption work in the financial sector. Law enforcement and judicial organs and discipline inspection and supervision organs coordinate to promote risk handling and anti-corruption work in the financial sector, resolutely investigate and deal with various corruption issues behind financial risks, and pay attention to preventing capital market risks that may be induced by corruption cases. Priority will be given to investigating and dealing with cases that may affect the major reform process of the capital market, may cause systemic risks, and cases in which regulatory staff collude with market personnel inside and outside. Strictly regulate the conduct of staff of securities regulatory institutions to work in enterprises or other profit-making organizations directly related to their original work and business in accordance with law. Those who do not strictly implement laws and regulations, fail to report clues when discovered, fail to file cases, fail to investigate and handle them effectively, or interfere with the normal investigation and handling of cases, are to be seriously pursued for responsibility in accordance with rules and discipline and in accordance with law.