Caitong Securities Gets Warning Letter Over Internal Control Gaps; 2026 Broker Penalties Hit 192, 58 Firms

On August 7, the Zhejiang Securities Regulatory Bureau disclosed a penalty notice, issuing a warning letter to Caitong Securities. The notice showed that Caitong's brokerage business had deficiencies in internal system construction, account monitoring and early-warning handling, and permission management; its proprietary trading business had deficiencies in department and position function independence, trading instruction review, inquiry activity monitoring, compliance personnel deployment, and audit work. The penalty covers both brokerage and proprietary trading business lines, a relatively rare occurrence in securities firm penalty notices.

According to Yidong Data statistics, as of August 7, regulators have issued 192 penalty notices to securities firms since 2026, involving 58 firms, with nearly 100 securities practitioners penalized individually or jointly. In internal control violations such as inadequate due diligence, non-compliant employee compliance management, and branch management deficiencies, regulators simultaneously pursued the responsibility of direct responsible persons and management personnel. Some penalty notices extend to core senior management of securities firms, including retrospective penalties for executives who have already left their posts.

By penalty type, notices involving corporate governance and internal control were the most numerous at 78; brokerage business line notices totaled 57; continuous supervision violations 19; investment banking business 34; investment consulting 7; margin trading business 10; personnel qualifications and practice standards 43; and other violations 15. High-frequency violations in brokerage and wealth management business include privately accepting investor mandates to buy or sell securities, trading securities under others' names, unauthorized operation of client accounts, and improper marketing and promotion. High-frequency violations in investment banking business include inadequate due diligence, failure to fulfill continuous supervision duties, failure to diligently supervise information disclosure, and issues related to raised funds and related-party transactions.