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"Investor Protection, Ming Rules, and Risks" Case - "Dealer Management" Mo Xinxin Securities Investment Goes the Way

(Summary description)Some securities practitioners in the market use professional stocks, promised bottom-earning income, and agreed revenue sharing to defraud customers of their trust, thereby privately doing asset management for investors and conducting illegal corporate wealth management activities.

"Investor Protection, Ming Rules, and Risks" Case - "Dealer Management" Mo Xinxin Securities Investment Goes the Way

(Summary description)Some securities practitioners in the market use professional stocks, promised bottom-earning income, and agreed revenue sharing to defraud customers of their trust, thereby privately doing asset management for investors and conducting illegal corporate wealth management activities.

Information

Some securities practitioners in the market use professional stocks, promised bottom-earning income, and agreed revenue sharing to defraud customers of their trust, thereby privately doing asset management for investors and conducting illegal corporate wealth management activities. However, when investment losses occur, conflicts often arise, and the fact that practitioners are violating financial rules on behalf of customers will also surface.

The former employee A (holding the securities broker's practice certificate) of a brokerage business department privately signed a cooperative financial agreement with the customer B of the business department, stipulating that it will conduct securities trading operations on the 600,000 funds in the client's account, with a commission period of 12 months (2015). March 17th to March 17th, 2016). During the contract period, if the account generates more than 20% profit, it will enjoy 20% of the profit. If the profit does not exceed 20%, the profit will be owned by the customer. If the loss exceeds 20%, the customer has the right to terminate the agreement or let it be free. Its services are until profitable. After the account loss was more serious, the two parties terminated the agreement in advance. Practitioner A has acknowledged the above-mentioned violations in writing to the local Securities Regulatory Bureau. A arbitrarily acting as a client to engage in securities investment and wealth management, and agreed to share investment income, its behavior has constituted a customer wealth management behavior, in violation of the Securities Law, the Interim Provisions on the Management of Securities Brokers, Securities Brokers Practice Regulations (Trial) and The Code of Conduct for Securities Practitioners, the CSRC has adopted administrative supervision measures for issuing warning letters. The China Securities Industry Association has taken disciplinary measures against securities practitioners A in accordance with the relevant provisions of the Rules for the Handling of Self-Regulatory Cases and the Measures for the Implementation of Self-regulatory Measures and Disciplinary Measures. Investor B, because he blindly believed in the commitment of the employee A, eventually suffered damage to his property.

 Securities brokerage management refers to the behavior of securities company employees privately accepting clients' entrustment and acting as agents to engage in securities investment and wealth management.

Article 143 of the Securities Law stipulates that a securities company that handles brokerage business shall not accept the discretion of the client to determine the securities trading, the type of securities selected, the number of purchases or purchases or the price of the sale and purchase; Article 144 stipulates that A securities company shall not in any way commit to the proceeds of the securities trading of the client or to compensate for the loss of the securities trading; Article 145 stipulates that the securities company and its employees shall not accept the client's entrusted business in private without the business establishment established by law. Securities.

Article 13 of the Interim Provisions on the Administration of Securities Brokers (hereinafter referred to as the “Interim Provisions”) stipulates that securities brokers shall practise within the scope of Article 11 of these Provisions and the authorization of securities companies, and shall not have the following acts: ) handling account opening, cancellation, transfer, securities subscription, transaction or fund access, transfer, inquiry, etc. for customers; (3) sharing investment income with customers, trading income from securities trading or compensating securities trading The promise of loss.

Article 20 of the "Rules for the Practice of Securities Brokers (Trial)" stipulates that securities brokers shall practise within the scope of Article 11 of the Interim Provisions and the authorization of the securities companies they serve, and shall not have the thirteenth provision of the Interim Provisions. Article banned; Article 32 stipulates that employees of securities companies engaged in securities brokerage business marketing activities shall be implemented with reference to the Code.

Article 1 of the Code of Conduct for Securities Practitioners stipulates that employees should consciously abide by the rules and regulations of the institution and the industry-recognized professional ethics and code of conduct.

From this case, we can see that investors must clearly distinguish between the asset management business of securities companies and the illegal financial management behavior of employees. Pursuant to the provisions of Article 45 of the Regulations on the Supervision and Administration of Securities Companies, securities companies may engage in securities asset management business that accepts clients' entrustment and uses client assets for investment in accordance with the Securities Law and these Regulations. The income generated by the investment is enjoyed by the customer, and the loss is borne by the customer. The securities company can charge the management fee according to the agreement. When a securities company engages in securities asset management business, it shall sign a securities asset management contract with the client, stipulating the scope of investment, investment ratio, management period and management expenses. The securities asset management business belongs to the company's behavior. The securities company is the main body and the investor signs the relevant asset management contract in writing. The employee's personal wealth management is a personal behavior of the practitioner. Generally, the practitioner and the investor privately sign the relevant contract or oral agreement. At present, securities companies strictly prohibit employees from engaging in illegal financial management activities, adopting a series of strict preventive measures, and fully revealing the risks during the telephone call back to investors. Under such circumstances, if the investor still privately entrusts the employee to manage his or her finances, it is generally recognized as the personal behavior of the employee. Once the investor has incurred losses due to illegal financial management, the investor can only claim rights from the practitioner.

Investors should not blindly believe that practitioners violate the law, should maintain a rational investment philosophy, and strive to improve their professional knowledge and experience. Investors can effectively prevent risks and obtain investment returns only by continuously learning, understanding various business rules and products in the securities market, analyzing market information, conducting independent judgments, and accumulating investment experience.

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