Core Viewpoint - The article highlights the regulatory actions taken against private equity firms in China for deviating from their core business, emphasizing the need for compliance and the risks associated with engaging in unrelated activities [2][3][4]. Group 1: Regulatory Actions - On July 15, the Hainan Securities Regulatory Bureau announced corrective measures against Hainan Zhuo Zhi Tang Private Fund Management Co., Ltd. for engaging in activities conflicting with private fund management [2][3]. - The firm was found to have violated regulations by not regularly updating the information of its employees and engaging in unrelated business activities, which led to administrative penalties [3][4]. - The company had previously faced disciplinary actions for similar violations, including a 12-month suspension of private product registration due to issues like unregistered products and management chaos [4]. Group 2: Industry Trends - The private equity sector has seen rapid growth, leading some smaller firms to seek alternative profit avenues, often crossing risk management boundaries [5]. - Reports from the Shenzhen Securities Regulatory Bureau indicated that some private equity firms have strayed from their primary responsibilities, engaging in unrelated activities such as selling pseudo-gold exchange products and providing consulting services [5][6]. - Specific examples include a private equity firm that earned over 1.5 million yuan in consulting fees by promoting a real estate company's financial products and another firm that primarily generated income through unrelated investment courses [6]. Group 3: Compliance and Future Actions - The Shenzhen Securities Regulatory Bureau plans to enhance regulatory inspections of private equity firms to ensure compliance and accountability for any illegal activities [6]. - The bureau aims to guide private equity firms to focus on their core investment business and improve their compliance and risk management mechanisms [6].

Core Viewpoint - The Shenzhen Securities Regulatory Bureau has identified serious violations among certain private equity firms, including improper delegation of investment management responsibilities, which undermines investor rights and damages the industry's reputation [1] Summary by Sections Typical Issues Reported - Some private equity firms are allowing third-party institutions to issue private equity funds under their name, effectively outsourcing investment management responsibilities [1] - Certain firms are conducting investment transactions solely based on investor instructions, lacking independent decision-making [1] - Instances of personnel lending fund-held stocks for day trading and allowing external parties access to trading systems have been reported, leading to criminal investigations [1] - Some firms are permitting non-employees to execute investment transactions and sign legal documents, effectively transferring investment management authority [1] - Investment decision-making committees in some firms are composed mainly of investor representatives, limiting the firm's influence on investment decisions [1] Regulatory Requirements - Private equity firms must adhere to fiduciary duties and manage funds independently, without delegating investment management responsibilities [1] - Firms are required to maintain strict compliance with legal regulations, prohibiting the establishment of funds through "channel" arrangements and the lending of securities accounts [1] - The regulatory body has taken administrative measures against firms violating these rules and has reported criminal activities to law enforcement [1]