Regulators have "zero tolerance"! Frequent fines on investment banks, and repeated warnings about securities firms' "red lines" in their practices.

Ask AI · Can repeated fines force brokerages to return to their original mission?

《Electric Eel Finance》Electric Eel Official Account / Article

Recently, multiple securities firms have received regulatory penalty notices in quick succession, with investment banking business becoming a “high-incidence area” for violations. This phenomenon not only reflects the reality that some institutions have lost control over internal governance and failed to perform their duties amid rapid expansion, but also serves as a mirror, highlighting the hollowing out and distortion of the responsibilities of “gatekeepers” in the capital market. When the “bridge” of sponsorship and underwriting shows cracks, the foundation of market trust is inevitably loosened.

Against the backdrop of intensifying competition in the market, some brokerages, in order to seize market share, have loosened their screening of project quality. From due diligence becoming a mere formality, to inaccurate disclosures, and on to over-packaging companies’ value—professional prudence in investment banking has given way to short-term interests. The issuance of these penalty notices is a direct response to this extensive model of “big scale, low quality”—the essence of financial services is absolutely not gambling-like risk-taking, but value protection grounded in a sense of reverence.

In addition, behind the penalty notices is the regulator’s continued implementation of a “zero tolerance” policy. Whether through in-depth on-site inspections or strengthening accountability mechanisms, clear signals are being conveyed: the capital market does not need sponsors who “push through while sick.” This is intended not only to punish past misconduct, but also to build an industry culture of “compliance creates value,” forcing brokerages to place the quality of their practice at the top of the business chain—thereby driving investment banking to transform from a “channel provider” into a “guardian of responsibility.”

For brokerages, penalty notices are both a warning bell and an opportunity for transformation. True competitiveness does not lie in techniques to evade regulation, but in earning market trust through a rigorous core. Only by embedding risk control into their DNA and empowering real entities with professional capabilities can investment banking break out of the trap of a “cycle of fines.” When every prospectus can withstand scrutiny over time, and every sponsorship carries respect for the market, brokerages can set sail together with companies and investors.

The market will ultimately reward institutions that stick to boundaries and cherish their reputation. The pain of penalty notices should be transformed into the courage for cutting out disease at the bone; the strictness of the red lines should become the ladder toward industry maturity. The rebuilding of this “high-incidence area” is destined to begin with a return to the original mission.