China International Capital Corporation (CICC) has been fined a total of 8 million yuan (approximately US$1.1 million) by the China Securities Regulatory Commission (CSRC) for failing to perform adequate due diligence during the initial public offering (IPO) of chip company S2C Limited. The penalties include a fine of 6 million yuan (US$841,000) for the company itself and an additional 2 million yuan confiscated from its sponsorship income. Furthermore, two CICC executives, Zhao Shanjun and Chen Liren, were each fined 1.5 million yuan [47eddc53].
The investigation into CICC's sponsorship of S2C's IPO was initiated after the company’s application was withdrawn in July 2022 due to allegations of falsified financial results. In February 2024, S2C was fined 16.5 million yuan for overstating its revenue, and the Shanghai Stock Exchange subsequently barred the company from listing for five years due to inflated profits reported at 12.5 million yuan in 2020 [950ede1c].
CICC has acknowledged the penalties and expressed its commitment to improving its practices in response to the CSRC's intensified scrutiny of IPOs since March 2024. This investigation is part of a broader regulatory effort to ensure transparency and accountability in the financial sector [47eddc53].
In addition to the penalties, CICC has been undergoing internal restructuring, implementing a new performance-rating system aimed at cutting costs. This includes demoting some senior bankers and reducing their pay, reflecting the bank's efforts to navigate a challenging financial landscape marked by a significant decline in deal-making [37585fb3].
As CICC deals with these regulatory challenges and internal changes, the landscape for investment banking in China continues to evolve. The ongoing scrutiny from the CSRC adds another layer of complexity to the bank's efforts to stabilize its operations and restore confidence among investors and clients [950ede1c].