BANK OF CHANGSHA(SH:601577) Shang Hai Zheng Quan Bao·2025-05-12 18:53Core Viewpoint - The ruling in the Blue Mountain Technology case establishes a precedent for holding individual sponsors liable for civil compensation to investors in cases of securities fraud, signaling a shift in the accountability of financial intermediaries in the capital market [1][2][3]. Group 1: Case Background - Blue Mountain Technology, a former New Third Board listed company, inflated its revenue by over 800 million yuan and profits by over 80 million yuan through fictitious business activities from 2017 to 2019, leading to significant false records in its public offering documents [2][3]. - The case involved four intermediary institutions, including Hu Long Securities, which failed to conduct due diligence and issued reports containing false statements [2][3]. Group 2: Legal Implications - The Beijing High Court's decision mandates that two project-signing sponsors and Hu Long Securities bear joint liability for 40% of the losses incurred by investors due to the false statements in the application materials for the selected layer listing [3][5]. - This ruling is significant as it marks the first instance in China where sponsors are required to bear civil compensation liability to investors, potentially leading to increased accountability for individual practitioners in the securities industry [1][4]. Group 3: Industry Impact - The judgment sends a strong message to the capital market, emphasizing that both intermediary institutions and individual practitioners must ensure high standards of professional conduct to avoid substantial civil liabilities [2][6]. - As regulatory scrutiny intensifies, it is anticipated that more individuals, including intermediaries and executives, will be named as defendants in securities fraud cases and may face joint compensation responsibilities [6].