Questions surrounding one of China's biggest accounting firms, the subject of a regulatory probe, have led to a derailing of the fundraising plans of nearly 50 Chinese companies.

The firm is Ruihua Certified Public Accounts, which the Chinese Institute of Certified Public Accounts said was the second-largest domestic auditor by revenue in 2018.

Regulators have suspended the approvals for initial public offerings (IPOs) by 28 companies that have Ruihua as their accountant.

Also, officials have halted the process of permitting 21 other companies who planned to refinance in the market. In the past month, at least four other companies have said they were dropping Ruihua as their auditor. The most recent, in a filing to the Shanghai Stock Exchange late Monday, is solar panel producer Longi Green Energy Technology.

Ruihua, which says on its website that it has more than 300 listed companies as clients, did not respond to requests for comment on Tuesday.

On July 8, the China Securities Regulatory Commission (CSRC) said it had launched a probe into Ruihua. In May, the firm's audit client Kangde Xin Composite Material Group Co. stunned investors by reporting missing bank deposits worth 12.21 billion yuan ($1.77 billion).

Earlier this month, the CSRC said it found Kangde Xin executives had inflated profits by 11.9 billion yuan between 2015 and 2018 and did not fully disclose dealings by related parties.

Ruihua has audited Kangde Xin since 2013. In a statement on its website on Sunday, Ruihua said it had been diligent in its work for Kangde Xin and had found nothing abnormal at the company.

Harsher Punishment

CSRC's probe comes at a time growing numbers of investors have called for tougher action against corporate malfeasance.

On Friday, the CSRC vowed to boost jail terms and fines for executives, controlling shareholders, auditors and sponsors who break disclosure rules.

Allen Huang, a bond investor, said "We certainly welcome harsher punishment," adding that "the cost of cheating China is too low."

The crackdown also comes as Beijing is dealing with a slowing economy and trade conflict with Washington - increasing politicians' focus on boosting domestic performance.

Xin Chen, a finance professor at Shanghai Advanced Institute of Finance, said that restoring investor faith was key to building an efficient capital market that could help fund high-tech companies and aid China in its jockeying with the United States.

"If auditors are found to be accomplices in corporate fraud cases, they should go bust," he said.

Questions surrounding one of China's biggest accounting firms, the subject of a regulatory probe, have led to a derailing of the fundraising plans of nearly 50 Chinese companies.

Questions surrounding one of China's biggest accounting firms, the subject of a regulatory probe, have led to a derailing of the fundraising plans of nearly 50 Chinese companies. The firm is Ruihua Certified Public Accounts, which the Chinese Institute of Certified Public Accounts said was the second-largest domestic auditor by revenue in 2018. Regulators have suspended the approvals for initial public offerings (IPOs) by 28 companies that have Ruihua as their accountant. Also, officials have halted the process of permitting 21 other companies who planned to refinance in the market. In the past month, at least four other companies have said they were dropping Ruihua as their auditor. The most recent, in a filing to the Shanghai Stock Exchange late Monday, is solar panel producer Longi Green Energy Technology. Ruihua, which says on its website that it has more than 300 listed companies as clients, did not respond to requests for comment on Tuesday. On July 8, the China Securities Regulatory Commission (CSRC) said it had launched a probe into Ruihua. In May, the firm's audit client Kangde Xin Composite Material Group Co. stunned investors by reporting missing bank deposits worth 12.21 billion yuan ($1.77 billion). Earlier this month, the CSRC said it found Kangde Xin executives had inflated profits by 11.9 billion yuan between 2015 and 2018 and did not fully disclose dealings by related parties. Ruihua has audited Kangde Xin since 2013. In a statement on its website on Sunday, Ruihua said it had been diligent in its work for Kangde Xin and had found nothing abnormal at the company. Harsher Punishment CSRC's probe comes at a time growing numbers of investors have called for tougher action against corporate malfeasance. On Friday, the CSRC vowed to boost jail terms and fines for executives, controlling shareholders, auditors and sponsors who break disclosure rules. Allen Huang, a bond investor, said "We certainly welcome harsher punishment," adding that "the cost of cheating China is too low." The crackdown also comes as Beijing is dealing with a slowing economy and trade conflict with Washington - increasing politicians' focus on boosting domestic performance. Xin Chen, a finance professor at Shanghai Advanced Institute of Finance, said that restoring investor faith was key to building an efficient capital market that could help fund high-tech companies and aid China in its jockeying with the United States. "If auditors are found to be accomplices in corporate fraud cases, they should go bust," he said.

'The cost of cheating China is too low': Bond Investor

British and Chinese securities watchdogs are discussing an agreement that will pave the way for landmark financial services projects between the countries, sources said, easing fears that Britain could be a less attractive partner for such deals after last month&#39;s vote to leave the European Union. 
 
Britain&#39;s Financial Conduct Authority (FCA) and the China Securities Regulatory Commission (CSRC) are cooperating on a regulatory framework for a scheme for distributing fund products in each other&#39;s jurisdiction and a proposed London-Shanghai link for trading shares, two people with direct knowledge of the matter said. 
 
Britain, home to the EU&#39;s biggest finance sector, has been pushing in recent years to deepen its financial services ties with China, which has agreed to these and other cross-border financial services schemes as part of the UK-China Economic and Financial Dialogue (EFD) programme. 
 
The UK&#39;s former Chancellor George Osborne and Chinese vice premier Ma Kai said at last September&#39;s EFD meeting in Beijing that they would explore the creation of a London-Shanghai equity link and mutual funds recognition scheme, but neither government has provided further details. 
 
The formal cooperation between the FCA and CSRC signals that the projects are going ahead, with one source saying the discussions had remained &quot;very positive&quot;. 
 
Some market watchers had raised concerns that leaving the EU, which puts in doubt the UK&#39;s future access to the trading bloc and its &quot;passports&quot; to provide financial services there, could scupper such projects by limiting their potential scope and appeal. 
 
&quot;So far none of the cross-border exchange initiatives has been derailed by the risk of Britain leaving the European economic area and the associated passporting rights,&quot; said Frederic Ponzo, managing partner at financial services consultancy GreySpark Partners in London. 
 
&quot;What is clear is that the CSRC and the FCA will not stop cooperating after the vote to leave the EU,&quot; he added. 
 
A second source said the FCA and CSRC were exploring a regulatory agreement similar conceptually to a memorandum of understanding (MOU) inked by the CSRC and the Hong Kong Securities and Futures Commission (SFC) prior to the launch of the Hong Kong-Shanghai stock trading link in November 2014. 
 
The Hong Kong-China MOU created a framework for policing the scheme, including sharing trading data and coordinating on investigations, although it was not clear if a UK-China cooperation would be as far reaching, the sources said. 
 
Details of the regulatory agreement may be announced at the next EFD meeting in autumn, though this has not been decided yet, both sources said. One said the UK and China may also unveil cooperation on so-called &quot;fintech&quot; initiatives. 
 
Both said, however, that Britain and China did not expect to announce any major new financial services initiatives at this year&#39;s EFD meeting, the date for which has not been set but will likely be held in October or November in Britain, a third source said, while both countries analyse the implications of Britain&#39;s exiting the EU. 
 
(Reuters)

UK and Beijing are exploring the creation of a London-Shanghai equity link and mutual funds recognition scheme

British and Chinese securities watchdogs are discussing an agreement that will pave the way for landmark financial services projects between the countries, sources said, easing fears that Britain could be a less attractive partner for such deals after last month's vote to leave the European Union. Britain's Financial Conduct Authority (FCA) and the China Securities Regulatory Commission (CSRC) are cooperating on a regulatory framework for a scheme for distributing fund products in each other's jurisdiction and a proposed London-Shanghai link for trading shares, two people with direct knowledge of the matter said. Britain, home to the EU's biggest finance sector, has been pushing in recent years to deepen its financial services ties with China, which has agreed to these and other cross-border financial services schemes as part of the UK-China Economic and Financial Dialogue (EFD) programme. The UK's former Chancellor George Osborne and Chinese vice premier Ma Kai said at last September's EFD meeting in Beijing that they would explore the creation of a London-Shanghai equity link and mutual funds recognition scheme, but neither government has provided further details. The formal cooperation between the FCA and CSRC signals that the projects are going ahead, with one source saying the discussions had remained "very positive". Some market watchers had raised concerns that leaving the EU, which puts in doubt the UK's future access to the trading bloc and its "passports" to provide financial services there, could scupper such projects by limiting their potential scope and appeal. "So far none of the cross-border exchange initiatives has been derailed by the risk of Britain leaving the European economic area and the associated passporting rights," said Frederic Ponzo, managing partner at financial services consultancy GreySpark Partners in London. "What is clear is that the CSRC and the FCA will not stop cooperating after the vote to leave the EU," he added. A second source said the FCA and CSRC were exploring a regulatory agreement similar conceptually to a memorandum of understanding (MOU) inked by the CSRC and the Hong Kong Securities and Futures Commission (SFC) prior to the launch of the Hong Kong-Shanghai stock trading link in November 2014. The Hong Kong-China MOU created a framework for policing the scheme, including sharing trading data and coordinating on investigations, although it was not clear if a UK-China cooperation would be as far reaching, the sources said. Details of the regulatory agreement may be announced at the next EFD meeting in autumn, though this has not been decided yet, both sources said. One said the UK and China may also unveil cooperation on so-called "fintech" initiatives. Both said, however, that Britain and China did not expect to announce any major new financial services initiatives at this year's EFD meeting, the date for which has not been set but will likely be held in October or November in Britain, a third source said, while both countries analyse the implications of Britain's exiting the EU. (Reuters)

UK and China regulators discuss framework for financial projects

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'The cost of cheating China is too low': Bond Investor

UK and China regulators discuss framework for financial projects