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Galaxy Securities Zhejiang Branch and Sub-branch Fined for Compliance Violations
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On September 18, the Zhejiang Securities Regulatory Bureau issued two penalties against China Galaxy Securities Co., Ltd.'s Zhejiang branch and its Taizhou Yinzuo North Street securities sales department for multiple compliance violations. The sales department was found to have missing records in the promotion of securities investment advisory services, violating the Securities Investment Advisory Business Interim Provisions. Additionally, some employees showed weak compliance awareness and failed to cooperate with on-site inspections, violating the Supervision and Management Measures for Directors, Supervisors, Senior Managers, and Practitioners of Securities and Fund Management Institutions. The Zhejiang branch was held responsible for inadequate compliance management of its subordinate branches. The regulator imposed a warning letter on the Zhejiang branch and ordered corrective measures for the sales department and its responsible person, Wu Tao. All penalties will be recorded in the securities futures market integrity file. An interviewed analyst commented that the case reflects a widespread 'business-first, compliance-second' tendency among brokerages, and the dual punishment of the branch, department, and individual signals a tightening of regulatory oversight and accountability in the securities industry.
Source report
On September 18, the Zhejiang Securities Regulatory Bureau (Zhejiang SRC) issued two penalty notices against China Galaxy Securities Co., Ltd. (hereinafter "Galaxy Securities"), targeting its Zhejiang Branch and the subordinate Taizhou Yinzuo North Street Securities Business Department for multiple compliance violations. Relevant institutions and responsible individuals have been held accountable.
Core Violations Identified
An investigation revealed two major compliance issues at the Taizhou Yinzuo North Street Securities Business Department:
- Missing records in securities investment advisory business promotion: The department failed to maintain proper documentation during the promotion of securities investment advisory services, violating Article 27, Paragraph 1 of the Interim Provisions on Securities Investment Advisory Business (CSRC Announcement No. 66 of 2020).
- Weak compliance awareness among staff: Some employees of the business department demonstrated a lack of awareness regarding compliant business practices and refused to cooperate with on-site inspections, violating Article 22, Paragraph 1 of the Supervisory Measures for Directors, Supervisors, Senior Management, and Practitioners of Securities and Fund Management Institutions (CSRC Order No. 227).
The Zhejiang SRC determined that the Galaxy Securities Zhejiang Branch failed to adequately supervise its subordinate branches, exhibiting insufficient compliance management and awareness, in violation of Articles 3 and 4 of the Compliance Management Measures for Securities Companies and Securities Investment Fund Management Companies (CSRC Order No. 166).
Regulatory Actions Taken
Pursuant to Article 32, Paragraph 1 of the Compliance Management Measures for Securities Companies and Securities Investment Fund Management Companies (CSRC Order No. 166), the Zhejiang SRC decided to:
- Issue a warning letter to the Galaxy Securities Zhejiang Branch as an administrative regulatory measure, and record this action in the securities and futures market integrity archive.
In addition, the regulator implemented traceability-based accountability, holding both the violating business department and its responsible personnel accountable. Specifically:
- The Zhejiang SRC ordered Galaxy Securities Taizhou Yinzuo North Street Securities Business Department and Wu Tao to rectify the issues as an administrative regulatory measure, also recorded in the securities and futures market integrity archive. This action aims to compel the institution and individuals to thoroughly address compliance deficiencies.
Industry Implications
According to industry insiders interviewed, this incident highlights a widespread tendency among many securities firms to prioritize business growth over compliance. The behavior of practitioners ignoring regulatory requirements and refusing to cooperate with inspections reflects a serious lack of grassroots compliance education, behavioral discipline, and accountability mechanisms. Compliance has not been genuinely integrated into the full business process.
Furthermore, the regulator's approach of imposing dual accountability on the branch, business department, and responsible individuals signals a normalization of stricter compliance enforcement, full-person accountability, and penetrating supervision across the securities industry.
Company Background
Public information shows that Galaxy Securities was established in January 2007 with approval from the China Securities Regulatory Commission (CSRC). It was founded with China Galaxy Financial Holding Co., Ltd. as the main sponsor, succeeding all business and assets of the former China Galaxy Securities Co., Ltd. The company is headquartered in Beijing with a registered capital of 10.934 billion yuan. China Galaxy Financial Holding Co., Ltd. serves as the controlling shareholder, while Central Huijin Investment Co., Ltd. is the ultimate controller.
Source
国际金融报Eastern
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China Galaxy Securities Zhejiang Branch Penalized for Compliance Failures at Taizhou Office