Last year, public offering funds received a flurry of "penalties"! 19 companies involved in six major violations

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Reporter | Li Lei    Editor | Xiao Ruidong

According to reports from the Daily Economic News, as public funds disclose their 2025 annual reports, the industry’s annual “compliance check” results have also come to light.

According to incomplete statistics by the reporter, at least 19 public fund companies have fully disclosed administrative regulatory measures or penalty decisions received in 2025 in their annual reports. The specific measures range from routine warnings and corrective orders to severe actions such as suspension of product registration, with many leading industry institutions collectively “crossing the line.”

2025 is a critical year for the public fund industry to move toward high-quality development. The China Securities Regulatory Commission officially released the “Action Plan for Promoting High-Quality Development of Public Funds” (hereinafter referred to as the “Action Plan”) in May of that year, clearly proposing to “strengthen regulatory enforcement and implement ‘long teeth with thorns’,” defining compliance red lines for the industry. Against this backdrop, regulators conducted comprehensive inspections of public fund companies’ compliance controls, investment operations, and sales management, with frequent disclosures of penalties directly reflecting the industry’s shift from scale expansion to quality improvement.

The reporter’s statistics show that at least 19 public fund institutions have been penalized, covering both leading and small- to medium-sized firms. Notably, penalties on top-tier public funds are concentrated, often involving core business areas, with some companies also receiving individual penalties for senior executives.

For example, E Fund disclosed in its 2025 annual report that on November 5, 2025, it received a warning letter from the Guangdong Securities Regulatory Bureau, mainly concerning investment operations, compliance controls, and sales management. The company rectified issues by improving systems and optimizing processes, with results verified by regulators.

HuaXia Fund’s annual report also shows that on November 4, 2025, the Beijing Securities Regulatory Bureau issued a warning letter, citing issues in personnel management, internal controls, and sales management. One senior executive was also issued a warning letter for similar issues. As of the report disclosure, HuaXia Fund had completed all rectifications and submitted a rectification report.

Southern Fund was also subject to administrative penalties. According to the announcement, on October 17 and November 18, 2025, the company was penalized by the Shenzhen Securities Regulatory Bureau and the Shenzhen Branch of the State Administration of Foreign Exchange, mainly for issues related to investment operations, personnel management, and foreign exchange registration, involving corrective orders, warnings, and fines. Senior executives also received warning letters. The company has now completed rectification and passed regulatory acceptance.

Fuller Fund was also subject to administrative regulatory measures for multiple reasons. On November 11, 2025, the Shanghai Securities Regulatory Bureau issued a corrective order involving corporate governance, compliance controls, investment operations, personnel management, and other issues (sales management, financial management). Two senior executives also received warning letters for issues related to investment or sales management. The company stated that it had completed rectification through system improvements and process optimization, with results verified by regulators, and the measures have been lifted.

Boshi Fund disclosed that on October 31 of last year, it was ordered to correct compliance control issues and suspend some operations by the Shenzhen Securities Regulatory Bureau, with two senior executives also penalized and issued warning letters. Boshi Fund stated that it had taken measures such as improving systems, optimizing processes, and strengthening supervision, fully completed rectification, and passed regulatory inspection.

Additionally, Huitianfu Fund was also penalized on November 11 of last year for issues related to compliance controls, investment operations, and fund sales, with three senior executives receiving warning letters, making it one of the companies with the most penalized executives. Huitianfu stated that it had rectified related issues through system improvements and management optimization, and passed regulatory inspections, pledging to strengthen internal controls and business management to continuously improve management quality.

Besides leading institutions, smaller companies also face regulatory measures. For example, Nanhua Fund disclosed in its annual report that it was subjected to administrative regulatory measures twice in November and December last year by Zhejiang Securities Regulatory Bureau, due to issues in compliance controls, investment operations, and other areas (fund sales), resulting in corrective orders and a three-month suspension of some services. Three senior executives and one staff member also received different regulatory actions such as corrective orders, interviews, or warning letters, making it one of the companies with multiple penalties.

Among small and medium-sized firms, Western Lide Fund was also penalized for issues including compliance controls, personnel management, integrity, and information disclosure. Its senior executives were penalized for IT-related issues. The company stated that it had actively taken rectification measures, including process optimization and staff training, and had completed the work by the end of the reporting period.

In addition, many other companies received regulatory fines for various issues, which will not be listed here one by one.

Looking at the reasons for violations among these 19 companies, regulatory penalties are not targeted at single points but cover the entire operation process of fund companies. Among these, deficiencies in compliance controls are the most prominent, with the other five major issues directly related to internal control failures. The regulator’s “zero tolerance” attitude toward such problems is also reflected in severe penalties like suspension of product registration.

First, deficiencies in compliance controls are the core keywords of this round of penalties. Many companies were found to have incomplete or poorly implemented internal control systems. For example, Great Wall Fund was ordered to correct and suspend the acceptance of related product registration applications for three months by the Shenzhen Securities Regulatory Bureau due to compliance issues; HuaAn Fund, Jiashi Fund, and others were also ordered to correct and suspend acceptance of fixed-income public fund registration applications for three months due to internal control and corporate governance issues. These serve as important signals of regulatory emphasis on internal control problems.

Second, irregularities in investment operations are another common issue. For example, HFT Fund was issued a warning letter by the Shanghai Securities Regulatory Bureau for issues such as non-standard private asset management business, insufficient active management of private asset management plans, and inadequate management of investment permissions. Chuangjin Hexin Fund was also ordered to correct and suspend new private asset management product filings for three months due to internal control and sales management issues.

Compliance loopholes in sales management are also widespread, with many top-tier companies mentioned for sales management problems, reflecting weak internal controls at the sales end. Personnel management and corporate governance issues are also frequently cited in company announcements.

Additionally, some companies revealed specific compliance issues in niche areas. For example, Manulife Fund was warned and fined 70k yuan by the Beijing Branch of the State Administration of Foreign Exchange for missing foreign exchange registration certificates before the 2021 equity transfer; Founder Fubon Fund was required by the Beijing Second Inspection Bureau of the State Taxation Administration to pay back taxes and fines for calculation errors in withholding personal income tax, both companies having completed rectification.

Many industry insiders believe that the dense penalties in 2025 for the public fund industry are not short-term regulatory measures but a normalized aspect of regulation under the background of high-quality development.

The CSRC explicitly stated in the “Action Plan” that it will further increase legal supply, promote revisions to the Securities Investment Fund Law of the People’s Republic of China, strengthen regulations on fund company shareholders, corporate governance, fund operations, personnel management, and market exit, enrich enforcement tools, and significantly raise the costs of violations; it will also promote coordination between administrative enforcement and criminal justice to severely crack down on illegal activities such as trading on non-public information, insider trading, and market manipulation, ensuring that regulation “grows teeth with thorns.”

Therefore, the dense issuance of industry penalties reflects the regulator’s efforts to reinforce fund companies’ compliance responsibilities and promote the industry’s return to asset management fundamentals. It also clearly defines compliance red lines and consolidates risk prevention foundations for high-quality development.