China securities regulator to reward whistleblowers in 17 cases, first batch under new rules

On September 18, the China Securities Regulatory Commission (CSRC) issued an announcement stating its intention to reward whistleblowers who provided leads in 17 cases, in accordance with the law. The cases involve various typical capital market violations, including:

• Illegal information disclosure by listed companies
• Insider trading
• Failure of intermediaries to fulfill their duties of diligence
• Non-compliance by private equity funds

Relevant whistleblowers may register for reward claims within three months.

A Milestone in Whistleblower System Implementation

This represents a significant practice by regulatory authorities in collectively honoring rewards since the implementation of the Provisions on Reward Work for Whistleblowers Reporting Illegal Activities in Securities and Futures on December 30, 2025. It marks the transition of the capital market's whistleblower system from paper rules to actual operation, providing a vivid illustration of building a diversified and collaborative market supervision system.

The Challenge of Information Asymmetry

Illegal and non-compliant activities in the capital market are often highly concealed. Acts such as financial fraud, insider trading, and tampering with audit working papers mostly occur within enterprises or during the business processes of intermediaries. External investors find it difficult to obtain core evidence, and relying solely on on-site inspections and post-event investigations by regulators frequently faces the practical challenge of information asymmetry.

However, insiders on the front lines are more likely to detect details of violations. A single truthful and complete lead can significantly shorten case-handling periods, reduce regulatory investigation costs, and facilitate the rapid verification of major cases. In the past, however, reporting entailed professional risks and rights-protection costs, coupled with concerns about identity exposure, leading many informed individuals to remain silent.

Economic Incentives and Confidentiality Protections

The whistleblower system alleviates these concerns through economic incentives and strict confidentiality protections, mobilizing social supervisory forces scattered across all corners of the market.

The new regulations raise the reward ratio to 3% of confiscated fines and illegal gains. Ordinary major leads can receive rewards of up to RMB 500,000. For cases with nationwide impact, involving particularly large sums, or where the whistleblower is an internal informed person, the maximum reward for case leads can reach RMB 1 million.

Robust Protection of Whistleblower Rights

More critical than the monetary rewards is the rigorous protection of whistleblowers' identities and rights. The new regulations implement anonymous management of whistleblower identities, prohibiting the disclosure of personal information except under statutory circumstances. They strictly forbid enterprises from obstructing internal personnel from reporting through means such as terminating or modifying labor contracts, and explicitly stipulate heavier accountability for retaliatory acts.

Clear liability clauses are established for staff members who illegally disclose lead information or neglect their duties, comprehensively tightening the protective net for confidentiality and anti-retaliation. Meanwhile, clear red lines are drawn to strictly prohibit false accusations, framing others, or collusion to defraud rewards, preventing abuse of the system and achieving a balance between encouraging reporting and guarding against malicious reports.

The Path Forward: From Rules to Reality

The vitality of a system lies in its execution. The public fulfillment of rewards sends a clear signal to the entire market: whistleblowers who dare to come forward to expose illegal and non-compliant activities will receive affirmation and returns from the system.

At the same time, it must be recognized that fulfilling rewards is only one link in the system's operation. For the system to truly take effect, practical bottlenecks need to be continuously addressed:

• On the one hand, full-process confidentiality mechanisms must be consistently implemented to reduce the risk of identity exposure.
• On the other hand, the criteria for identifying retaliatory acts and the pathways for relief must be refined, ensuring that whistleblowers who suffer retaliation have avenues for protecting their rights, thereby genuinely solving the problem of "what happens after blowing the whistle."

Conclusion: Toward Market Co-Governance

High-quality development of the capital market requires not only regulators wielding sharp swords but also joint supervision by the whole society. This is not merely a simple rewarded reporting mechanism, but rather reflects a governance approach of market co-governance: enabling informed persons to serve as the market's "lookouts," using institutions to eliminate their worries, and ensuring that voices of justice receive positive feedback.

We look forward to more informed individuals daring to step forward, bringing more hidden illegal activities to light, building a solid barrier for investor rights protection, and driving the capital market toward greater openness, transparency, and integrity.