Recently, due to problems in private asset management business, Shenwan Hongyuan(000166.SZ) and its then deputy general manager received the fine issued by the Shanghai Securities Regulatory Bureau on the same day.
In the ticket, Shenwan Hongyuan was pointed out that "without prior Investing in securities" underwritten by affiliated parties with the consent of investors "is not related to other business The three major problems of effective isolation” and “unreasonable valuation methods”.
A head brokerage insider Su Kang (pseudonym) told the "China Business News" reporter that the first two problems are more serious in nature. Saying that the valuation method is unreasonable, some brokerages will choose to take risks and "try it out", then the underwriting of bonds and asset management business without investment related parties and the fact that it is not effectively isolated from other businesses is a "red line that cannot be touched."
Su Kang also told reporters that in recent years, Shenwan Hongyuan business The style is relatively aggressive, and his team has repeatedly competed with the Shenwan Hongyuan team for projects. At the same time, due to Shenwan HongyuanSecuritiesby Shenyin Wanguo and HongyuanSecurities were merged, and there are more challenges in internal management, which may lead to Shenwan Hongyuan is one of the reasons why she has been getting fines frequently recently.
In fact, Shenwan Hongyuan was issued a warning letter by the Shanghai Securities Regulatory Bureau this time, which is the sixth time since 2021 that Shenwan Hongyuan has been named by supervision. Its asset management revenue ranking has dropped from the top to the eighth position when it was merged and established in 2015; the asset management revenue in 2020 has not yet reached the level in 2017.
Three major problems in private asset management
According to the warning letter issued by the Shanghai Securities Regulatory Bureau recently, there are three major problems in the private asset management business of Shenwan Hongyuan:
The first is to invest in securities underwritten by related parties without obtaining the prior consent of investors during the operation of individual private equity asset management plans. Second, it failed to effectively isolate private asset management business from other businesses. Third, the existence of holdings in different private asset management plansDifferent valuation methods are used for similar assets, and individual private asset management plans do not strictly comply with the principle of fair valuation, and the valuation methods are unreasonable. In addition, the company's individual private asset management plans did not adjust the valuation in a timely manner when the relevant bonds had materially defaulted, and the valuation procedures were flawed.
Zhu Minjie, then vice president of Shen Wanhongyuan, was issued a warning letter at the same time, referring to the first two problems mentioned above.
What is the reason for the above problem? Why wasn't it discovered in time? What corrective measures have been taken? The reporter sent an interview letter to Shenwan Hongyuan Securities, but has not received a reply as of press time.
In Su Kang's view, the "different valuation methods for similar assets held by different private asset management plans" listed in question 3 may be due to the use of amortized cost method for old products. "According to the latest regulatory requirements, the valuation of private asset management plans should no longer use the amortized cost method, and products that have already adopted the amortized cost method need to be rectified. The amortized cost method is beneficial to securities companies to a certain extent, and it has been expressly stated a few months ago. Prohibited. It is very likely that Shenwan Hongyuan Securities did not complete the change in the valuation method of the corresponding products within the specified time, and the newly issued products were not valued by the amortized cost method, resulting in inconsistent and unreasonable valuation methods.”
Article 43 of the Measures for the Administration of Private Equity Asset Management Business of Securities and Futures Business Institutions (hereinafter referred to as the "Practice for Private Equity Management") stipulates that securities and futures business institutions shall implement net value management of asset management plans, and determine reasonable Valuation methods and scientific valuation procedures can truly and fairly calculate the net value of the asset management plan.
Another brokerage insider, Zhou Sheng (pseudonym), said that requiring institutions to strictly abide by clear, identical and fair valuation methods is to protect the interests of investors. If the valuation method of private assets is left to the choice of institutions, asset management institutions are likely to sacrifice the interests of investors in order to maximize their own interests.
In response to "the private asset management business is not effectively isolated from other businesses", Zhou Sheng analyzed that it may mean that it is relatively likely that it is not effectively isolated from the investment banking business and self-operated business. He then told reporters what he had known since his career. For example, investment bankers tell asset managers the inside information of the companies they serve, and asset managers adjust product plans accordingly, which may involve insider trading. Or, it is strictly forbidden to mix own funds with client funds.
Su Kang believes that with the strengthening of supervision, the probability of asset management business being mixed with other businesses, especially self-operated business, has been greatly reduced, and securities companies generally have a clear firewall system. However, the system can be difficult to prevent. If the self-inspection of securities companies is not timely and strict, irregularities may occur.
Investing in securities underwritten by affiliated parties must obtain the prior consent of investors, which is an express provision in paragraph 2 of Article 66 of the Private Equity Management Measures. The clause states that securities and futures business institutions that engage in major related-party transactions with asset management plan assets shall abide by laws, administrative regulations, regulations of the China Securities Regulatory Commission and contracts. Obtain the consent of investors in advance, inform investors and custodians in a timely manner after the event, and report to relevant CSRC offices and securities investmentAssociation of fund reports, the affiliated transactions of investing in securities and futures shall also be reported to the securities and futures exchange.
The reporter noticed that Shenwan Hongyuan has also been banned by Yunnan Securities Regulatory Bureau and Jiangsu Securities Regulatory Bureau for issues such as branches, sales departments, and research reports this year. , Shanghai Securities Regulatory Bureau, Chongqing Securities Regulatory Bureau, Xinjiang Securities Regulatory Bureau and other regulatory authorities issued warning letters or interviews. This punishment is the sixth time that he has been named this year.
The ranking of asset management revenue declined
The asset management business was once an advantageous project of Shenwan Hongyuan.
In 2015, at the beginning of the merger between Shenyin Wanguo and Hongyuan Securities, Shenwan Hongyuan attracted a lot of attention, and its asset management business was a benchmark in the industry. At that time, the Securities Association of China (hereinafter referred to as "China Securities Association") announced two rankings related to the asset management business of securities companies in 2015. In the ranking of client asset management entrusted funds, Shenwan Hongyuan ranked second with 694 billion yuan, second only to CITIC Securities, at Huatai Securities, Guotai Junan; and in the ranking of the net income of the entrusted asset management business, Shenwan Hongyuan even surpassed CITIC Securities to top the list, reaching as high as 1.956 billion yuan.
From the following year, the ranking of Shenwan Hongyuan’s asset management business began to decline. Also according to the ranking of securities companies published by the China Securities Association, Shenwan Hongyuan’s 2016 annual average monthly entrusted funds for client asset management dropped to fourth with 682.5 billion yuan; The net income of asset management business ranked fifth with 1.689 billion yuan. In that year, the net income of its asset management business decreased by 267 million yuan.
In 2017, according to the statistics of China Securities Association, “Customer Asset Management The “monthly average entrusted funds” is no longer counted, and the “net income from client asset management business” is adjusted to “income from client asset management business”. Shenwan Hongyuan Securities dropped out of the top ten and ranked 12th, with an income of 575 million yuan. In 2018 and 2019 The asset management business has made progress, ranking sixth and fifth with revenue of RMB 803 million and RMB 1.196 billion respectively. In 2020, the revenue of asset management business dropped slightly to RMB 1.183 billion, and the ranking slipped to eighth, Orient Securities, CITIC Securities, Huatai Securities, Guotai Junan, Everbright Securities, Haitong Securities, Guangfa Securities all top it.
If the above rankings may have a large income gap due to differences in statistical calibers in different years, then Wind data may be used as a supplementary reference based on the data integrated by the brokerage companies' annual reports. According to Wind, for the whole year of 2017, Shenwan Hongyuan’s asset management business had a revenue of 2.048 billion yuan, ranking fifth among securities firms; in 2018, its asset management business revenue dropped to 1.411 billion yuan, ranking sixth. Since 2018, the total revenue of asset management has increased for three consecutive years, but the total revenue in 2020 is 1.883 billion yuan, which is still lower than the level in 2017, and the ranking has dropped to seventh.
Perhaps the company has made some adjustments due to the fact that the revenue of the asset management business has not improved significantly for many years. In March 2021, Shenwan Hongyuan issued the "Working Measures of the Executive Committee of Shenwan Hongyuan Securities Co., Ltd. (Trial)", and the head of the asset management division was handed over by Zhu Minjie to Yang Yucheng. Currently, Yang Yucheng is the general manager of Shenwan Hongyuan and the director of the executive committee. We will wait and see whether Shenwan Hongyuan's asset management business can return to its peak under the supervision of the general manager.
(article source: China Business Network)