Original Xiaoyikou Securities Compliance
included in the topic #Case Analysis 68
On May 17, 2021, China Securities Regulatory Commission issued the No. 61 Administrative Review Decision , detailing the report of an individual investor Let’s take a look at the causes and consequences of Dongguan Securities Dalian Xinghai Plaza Securities Sales Department.
Investors reported that the business department violated regulations in margin trading services
Applicant: Individual investor Xiang, address: Dalian City, Liaoning Province.
In April 2020, the applicant submitted relevant materials reporting Dongguan Securities Dalian Xinghai Plaza Sales Department to the Dalian Securities Regulatory Bureau.
The reporting materials mainly reflect two problems:
First, during the account opening process of margin financing and securities lending business, Dongguan Securities and the sales department failed to fully disclose and explain business risks and failed to provide the applicant with a "Margin Trading and Securities Lending Contract". ;
Secondly, during the process of carrying out the margin trading and securities lending business, the business department notified the applicant on January 31, 2019 that the margin call and securities lending account should maintain a guarantee ratio of less than 130%, and refused to increase the margin the next day. The forced liquidation of positions violated the provisions of the "Margin and Securities Lending Contract";
Third, no special department was designated to handle customer complaints.
The regulatory department accepted the report and carried out verification
After receiving the report materials, the Dalian Securities Regulatory Bureau carried out verification work on the reported matters.
1. Regarding the applicant Xiang’s margin financing and securities lending business contract.
After verification, on July 15, 2016, the applicant Xiang applied for the opening of margin financing and securities lending business at the business department. The business department provided the "Business Department Contract Signing Form" signed by the applicant, as well as the applicant and the business department Photos of staff holding traces of the "Margin and Securities Lending Contract".
Applicant Xiang said in the "Margin and Securities Lending Contract" "I confirm that Party B has explained to me the relevant business rules and the contents of this contract, and explained the risks of the margin trading and securities lending transactions. I promise to have fully and carefully read the "Margin and Securities Lending Contract" and "Risk Disclosure Statement for Margin and Securities Lending Transactions" (hereinafter referred to as "Risk Disclosure Statement"), fully understand the relevant business rules of margin trading and securities lending, the terms of this contract and business risks, and are willing to bear the risks and losses on your own." , handwritten statement "I confirm that the summary of the above statement is my true expression of intention."
Applicant Xiang Mou checked "Yes" on the question "Have the business personnel explained to you the rules of margin trading and securities lending business, and did you know and understand the contents of the margin trading and securities lending contract and risk disclosure letter" in the margin trading and securities lending business account opening return questionnaire? option and sign to confirm.
The claim of the applicant that the business department failed to fully disclose the risks to him, failed to send a dedicated person to explain this high-risk business as required, and failed to hand over the "Margin and Securities Lending Contract" to himself is not valid.
Regarding the issue raised by the applicant that some of the signatures in the "Margin and Securities Lending Contract" were forged, the applicant's entire process of signing the "Margin and Securities Lending Contract" left clear traces. As a non-appraisal agency, the regulatory authorities found no obvious abnormalities.
2. Regarding the applicant Xiang’s belief that the sales department’s forced liquidation of positions violated the rights and interests of customers.
After verification, at 14:49 on January 31, 2019, the staff of the sales department notified the applicant by phone that the maintenance guarantee ratio of the margin trading account was less than 130%, and a risk reminder text message was sent after the market closed.
According to the recorded phone call that day, the sales department staff told the applicant when talking to the applicant, "The company stipulates that the maintenance guarantee ratio of credit customers must be higher than 130%. It is now 125%. I suggest you sell some stocks." The applicant asked if it was possible to top up the deposit the next day, and the staff member replied, "Not tomorrow, it must be today." After the call ended, the applicant operated his account to sell 8,700 shares of the two-financing account stocks that day.
The regulatory authorities believe that during the phone call with the applicant, the staff notified the applicant to promptly replenish collateral or reduce liabilities in accordance with Article 24 (4) of the "Margin and Securities Lending Contract". After being notified by the ministry, I sold the stocks on the same day and no forced liquidation occurred.
The staff of the sales department failed to inform the applicant during the phone call that "the collateral should be replenished or the liability should be reduced in a timely manner within the specified guarantee period. The guarantee period is two trading days." This is a fault of the staff.
3. Regarding the complaint handling mechanism of the sales department.
After verification, Dongguan Securities has formulated a unified complaint handling process. The sales department has a dedicated complaint specialist and a complaint hotline, and has clarified the complaint handling docking mechanism, which is posted in the customer reception area at the front desk of the sales department.
Therefore, the applicant’s claim that Dongguan Securities and the sales department did not designate a special department to handle customer complaints is not true.
Although the sales department did not break any laws or regulations, there were work errors.
During the verification, the regulatory authorities determined that the sales department staff had made mistakes in the specific service process when they were told by the sales department staff that had to add a margin call that day, and the sales department needed to strengthen its personnel. Training and management, but does not constitute violations of laws and regulations.
According to the contract, Article 24 (4) of the "Margin and Securities Lending Contract" stipulates: When the applicant's credit account maintenance guarantee ratio is lower than the liquidation line and greater than or equal to the emergency liquidation line, Dongguan Securities shall If the applicant is notified to replenish collateral or reduce liabilities in any of the ways stipulated in Article 47, the applicant shall promptly replenish collateral or reduce liabilities within the period of insurance call stipulated by Dongguan Securities, and make sure that any trading day within the period of insurance call is The final maintenance guarantee ratio shall not be lower than the warning line. The insurance call date is two trading days. If the insurance call period is changed in accordance with the laws, regulations, rules, normative documents, stock exchanges and Securities Registration and Clearing Company business rules and Dongguan Securities business rules, Dongguan Securities notifies applicants in the form of announcements through the Dongguan Securities website or Dongguan Securities business premises. If the applicant fails to replenish collateral or reduce liabilities in a timely manner as required, Dongguan Securities has the right to forcefully liquidate the position.
Judging from the entire process of this complaint and reporting case, the entire work of the securities business department was almost perfect. However, the staff failed to fully comply with the contract and make accurate statements during the communication, resulting in a certain degree of work failure. fault. In a word, as a front-line practitioner who directly faces investors, your work cannot be too meticulous!
Disclaimer: This article is a personal compilation. If there are any discrepancies, please consult professional institutions and inquire about relevant laws, regulations and regulatory authorities. I do not assume any responsibility. Follow the public account to learn more case analysis and rule interpretation! For business cooperation, information sharing, group membership, contribution, and reprinting, you can search on WeChat and follow the public account "Security Industry Compliance"!
