Core Insights - Recent regulatory scrutiny has revealed misconduct among certain private equity firms in Shenzhen, including selling fraudulent products and engaging in unrelated activities such as fortune-telling and course sales [1][2][4] - The Shenzhen Securities Regulatory Bureau plans to enhance compliance checks and hold violators accountable, urging private equity firms to focus on their core investment activities and improve compliance and risk management mechanisms [1][6] Group 1: Regulatory Findings - Some private equity firms have deviated from their primary responsibilities, engaging in unrelated activities like fortune-telling and selling courses, which has raised concerns [2][3] - A specific equity private equity firm was found to have mixed operations with related companies, conducting activities unrelated to fund management [2] - Misconduct includes selling fraudulent products and providing consulting services that do not align with private equity management [2][4] Group 2: Financial Misconduct - Certain private equity firms have been implicated in profit-sharing arrangements that harm investor interests, such as receiving payments for facilitating transactions involving municipal bonds [4][5] - Instances of "high buy-low sell" transactions have been reported, where private equity firms sold bonds at significantly lower prices to their executives and then repurchased them at inflated prices [4] - Some firms have charged undisclosed high consulting fees to managed funds, further compromising investor transparency [4] Group 3: Illegal Activities - Some private equity managers have exploited their credentials to engage in illegal fundraising activities, promising investors guaranteed returns [5] - There are reports of firms using their management qualifications to facilitate illegal activities, including market manipulation and unauthorized financing [5] - The regulatory body has emphasized the need for private equity firms to adhere to legal and ethical standards, avoiding any involvement in illegal fundraising or financing activities [5][6] Group 4: Industry Trends - As of June 30, 2023, over 600 private equity managers have deregistered, indicating a significant industry cleanup [7] - The deregistration includes both voluntary and association-initiated cancellations, reflecting a broader trend of regulatory tightening in the private equity sector [7]

Core Viewpoint - The Shenzhen Securities Regulatory Bureau has highlighted significant violations among private fund managers, including engaging in unrelated business activities, using managed funds for profit transfer, and participating in illegal activities, prompting increased regulatory scrutiny [1][2][3]. Summary by Relevant Sections Violations Identified - Private fund managers are involved in activities unrelated to fund management, such as selling pseudo-gold exchange products and providing consulting services [2][3]. - Specific cases include a private equity firm promoting a real estate company's debt products and charging over 1.5 million yuan in consulting fees [2]. - Some firms derive most of their income from unrelated activities, such as selling investment courses through social media [2]. Profit Transfer and Illegal Activities - Violations include using managed funds to provide liquidity support for designated bonds and charging large consulting fees not included in fund assets [3]. - Notable illegal activities involve unregistered partnerships soliciting funds and using management qualifications to facilitate illegal fundraising [3][4]. - Instances of market manipulation and illegal margin trading using private fund assets have been reported [4]. Regulatory Requirements - The Shenzhen Securities Regulatory Bureau has set forth four key requirements for private fund managers: focus on core business, enhance compliance and internal controls, prevent illegal activities, and ensure sustainable operational capacity [5]. - Firms must avoid engaging in unrelated business activities and prioritize investor interests while strengthening compliance mechanisms [5]. - Continuous investment in resources is necessary to maintain compliance with regulatory standards, and firms lacking operational capacity should consider voluntary deregistration [5].

Core Viewpoint - The Shanghai Securities Regulatory Bureau has issued a notice to enhance the compliance and operational standards of private fund managers in the region, emphasizing the need for self-assessment and rectification amidst increasing regulatory scrutiny [1][2][3] Regulatory Requirements - Private fund managers in Shanghai are required to organize collective learning sessions on relevant laws and regulations, including the Securities Investment Fund Law and the Private Investment Fund Supervision Regulations [2] - Participation in compliance training is mandated, with the Shanghai Securities Regulatory Bureau providing guidance and resources for private fund managers to improve their operational compliance [2] - A self-assessment and rectification process must be conducted by private fund managers, focusing on their operational status, fund performance, and any unregistered partnerships [2][3] Self-Assessment Focus Areas - The notice outlines specific self-assessment requirements for different types of private funds, including checks on investment management practices, compliance with fund contracts, and the handling of fund assets [4][5] - For equity investment funds, managers must verify the use of professional custodians and assess potential conflicts of interest and fund pooling practices [4] - For quantitative strategy funds, self-assessment must include evaluations of risk management, model testing, and the adequacy of IT systems [5] Market Activity - Despite stricter regulations, the enthusiasm for new private fund products remains high, with a nearly 40% year-on-year increase in the number of private fund product registrations in 2024 [1][6] - In April, 638 private securities managers registered a total of 1,170 private securities products, marking a 12.18% increase from March and the highest monthly registration in nearly two years [6][7] - Equity strategy products accounted for over 64% of the total registrations in April, indicating a renewed investor interest in stock assets [6][7]