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Recently, the General Office of the Central Organization Committee, CPC has issued an official reply on the major reform of securities law enforcement system of China. The official reply mainly involves four aspects. Firstly, an Administrative Punishment Committee of China Securities Regulatory Commission (hereinafter referred to as the CSRC) is to be established, under which there shall be one General Office. Secondly, the First Inspection Bureau and the Second Inspection Bureau shall be merged into one Inspection Bureau (Chief Inspection Office). Thirdly, an Inspection Division shall be established with the approved staffing level of 170 members. Fourthly, the local agencies of the CSRC shall increase their inspection forces by 110 members.
Under the new system, the chief inspector shall conduct overall coordination and instruct the inspection work within the whole system. The Inspection Bureau shall be responsible for organizing, coordinating, instructing and urging case investigations, case-filing, review and administrative punishment, cross-border law enforcement cooperation and anti-monetary laundering within the sector. The Inspection Division shall be responsible for investigating insider dealings, market manipulation and false statements as well as the critical, urgent and sensitive cases with extensive concerns and great influence. The local inspection bureaus and all the inspection forces of local inspection bureaus shall be responsible for investigating the cases within the areas of their jurisdiction, and performing the informal investigations and various supportive investigations. The administrative punishment committee shall be responsible for trying all the cases.
The essence of this reform resides in the following items. First of all, the pattern of “separating inspection from trial”, which has been promoted by the CSRC in recent years, has been determined in the form of system, creating the mutual restriction mechanism of investigation and punishment powers and enhancing the professionalism, efficiency and justice of law enforcement. Secondly, an inspection system under centralized and unified command has been set up, which can enhance quick response capability and overall operational function. Thirdly, the inspection forces are further strengthened to match the demands of market development.
In recent years, the securities regulators have been striving for the law enforcement pattern and system which meet the status quo and development of our domestic capital market. Coupled by the rapid growth of the securities market, and higher degree of opening up to the outside, violations of related securities laws and regulations are characterized with new types, large varieties and internet-based form. Consequently, an increasing number of cases and the occasional occurrence of serious cases severely disrupt the normal market order and challenge the standardized development of securities market. The reform of the law enforcement system is aimed at optimizing the law enforcement resources, enhancing the law enforcement forces, tightening the organization and management, conducting centralized and uniform command, rigorously investigating and punishing various infringements upon relevant laws and regulations, and earnestly protecting the interests of all the investors.
Guided by the spirits of the 17th CPC National Congress, this major reform is pursued under the correct leadership of the CPC and the State Council and with the vigorous support from all the related departments. The reform plan, based on the summary of law enforcement experience for over one decade, is developed according to the concept of scientific development and in consideration of the actual development in the domestic securities market, roughly creating a securities laws enforcement system with Chinese characteristics. The implementation of this system will certainly contribute to regulating the operation of Chinese securities market and promoting the healthy and steady development of the securities market.
At present, the related departments under the CSRC are actively arranging for the implementation of the reform plan, including the orderly development of various adjustments, the steady transition of personnel and business, preliminary completion of internal integration, the gradual availability of the first batch of candidates for the inspection division, and the nationwide recruitment of accounting, legal, finance and computer professionals. This morning, the Vice-secretary of Party Committee and Vice Chairman of the CSRC, Comrade Fan Fuchun declared the formal establishment of the CSRC Inspection Division and the official operation of the merged Inspection Bureau (Chief Inspection Office).
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