Public Offering Penalty Records Revealed

Ask AI · Does executive accountability punishment signal that industry risk control is entering deep waters?

Reporter: Hong Xiaotang

As public fund managers’ 2025 annual reports are being released in large numbers, a picture of a regulatory storm is unfolding before the public.

Based on an incomplete tally by Economic Observer, using information from these annual reports, it was found that as of the end of March this year, more than 20 public fund institutions have, over the past year, received warning letters or orders to make rectifications issued by regulators. The entities penalized include both industry giants with asset sizes exceeding one trillion and smaller institutions seeking differentiated breakthroughs.

From a closer review of the specifics, these funds’ violations span multiple areas, including investment and research internal controls, sales systems, and professional conduct of employees.

In fact, as early as 2024, the National Audit Office carried out unprecedented on-site, penetration-style audits of more than a dozen leading public fund companies. Now, due to new information disclosure requirements, the “aftershock” of those audits is being reflected in these annual reports in the form of administrative penalties, regulatory warnings, and the like.

Product registration “cut off”

If issuing warning letters is the regulator’s “tapping on the shoulder,” then directly halting new product registrations or pausing certain specific businesses is no different from cutting a fund company’s “lifeline.” In today’s public-fund industry—moving upstream against the current, otherwise you fall behind—business shutdowns for three months mean potentially missing a market cycle and channel booking windows. In the penalty notices disclosed in this round of annual reports, this type of punishment appears frequently.

Among them, two long-established giants—Hua’an Fund and Harvest Fund (Jiashi Fund)—both “took a tumble” in this key territory.

According to the annual reports disclosed for their respective products, in November 2025, Hua’an Fund and Harvest Fund were each issued penalty notices by the Shanghai and Beijing CSRC offices, respectively. The core of the punishment was: “suspending the acceptance of the registration of fixed-income public fund products for three months.” Hua’an Fund’s problems had a long chain, spanning investment operations, compliance internal controls, personnel management, corporate governance, fund sales, and even financial management. Harvest Fund, meanwhile, exposed weaknesses in corporate governance, investment and research operations, and compliance risk control.

Now that three months have passed, on March 30, Harvest Fund submitted reports for five products in one go. This is the first time the company has reported conventional products since October 9 of last year.

In addition, Great Wall Fund was required by regulators to suspend the registration of relevant product categories for three months due to problems in its internal control system.

“Targeted strikes” at private accounts and specific businesses

Beyond the main public-fund battleground, violations in non-public fund business were also met with a “lightning shutdown.”

Creative Fund (Chuangjin Hexin) performed relatively restrained in the public-fund space, but with support from its major shareholder First Capital Securities, it had notable advantages in the private asset management (private accounts) domain.

Because of shortcomings in its systems and inadequate execution in investment operations and sales management, the company’s record filing for newly added private asset management products was pressed with a three-month pause key.

Smaller institutions such as Nanhua Fund also kept receiving penalty notices one after another. In November 2025, Nanhua Fund was ordered to make corrections for issues related to corporate governance. Just one month later, by late December, regulators imposed “punishment for multiple offenses,” not only ordering Nanhua Fund to rectify again, but also directly issuing a heavy measure of “pausing the acceptance of certain businesses for three months.”

Leading public funds expose internal control shortcomings

From the centralized disclosures of penalties in the 2025 annual reports in this round, it can be seen that leading public-fund companies such as 华夏基金 (ChinaAMC), 富国基金 (Fosun/Fugao?), 汇添富基金 (Harvest? Actually 汇添富 = Harvest? but keep translation?), 博时基金 (Bosera), 南方基金 (Southern), and 中欧基金 (China Europe) all appeared on the rectification list.

Among the reasons for penalties for these institutions, “compliance internal control deficiencies” and “sales management violations” became high-frequency terms.

For ChinaAMC, as an industry leader, the information disclosed by the Beijing CSRC shows it exposed problems in investment and research operations and sales management. Its shareholder, CITIC Securities, in its annual report, indicates that ChinaAMC had deficiencies in its compensation management. Fosun Fund had regulators name it across corporate governance, compliance internal controls, investment operations, personnel management, sales management, and even financial management.

For a long time, in order to maintain market share, leading institutions often engage in “gray-area” actions on the sales side—such as compromising with channels and spending on fees in an irregular way. In the view of multiple people interviewed from within institutions, the dense appearance in public-fund annual reports of ordered rectification letters and warning notices behind it is the regulator’s centralized “cleanup” of risks accumulated during the public-fund industry’s expansion period over the past several years.

Economic Observer noticed that in this wave of 2025 penalties, many cases involved “executive accountability.”

While facing corporate-level rectification, three executives of 汇添富基金 received warning letters directly; Hua’an Fund had four executives warned; institutions including Fosun Fund, Bosera Fund, Great Wall Fund, and Nanhua Fund each had two or more executives who were either interviewed by regulators or issued warning letters.

In the view of a person from a fund rating center in Beijing, this means compliance is no longer a “one-man show” handled only by the compliance department, but rather the sword of Damocles hanging over the chairman, general manager, and deputy general managers in charge of various business lines. Only by making decision-makers feel genuine pain at the personal level can regulators force the entire institution to embed a risk-control gene into the marrow of its business.

“Compliance blind spots” at smaller public funds

The penalty notices regulators issued to smaller public-fund institutions, compared with those issued to leading institutions, more clearly reveal a wide variety of compliance “blind spots.”

For example, Western Lead Fund received three penalty notices in 2025. In addition to issues with “compliance internal controls” and “information disclosure,” it was also found to have problems related to “integrity in professional conduct” and “personnel management.” Combined with an incident last September—when a certain fund manager surnamed Jie of that fund company was administratively detained by the police after allegedly gambling in a group at a hotel in Shanghai—this not only should have harmed the company’s reputation, but also revealed the institution’s lack of management over the behavior of core investment and research personnel outside of their eight-hour work window.

In addition, some of the reasons smaller companies were penalized are somewhat hard to take seriously. Manulife Fund received a penalty notice from the Beijing branch of the State Administration of Foreign Exchange because it lacked foreign exchange registration certificates during a share transfer in 2021. Zhengfang Fubon Fund received a heavy follow-up—tax assessment and fines—because, due to an internal calculation error, it failed to withhold and remit personal income tax as required, prompting an investigation by the tax authorities.

Also, Everbright Prudential Fund received a warning letter from the Shanghai CSRC because “the content displayed on its official website did not meet requirements.”

These “atypical” penalty notices convey a clear signal: in a context of comprehensive, multi-dimensional, strong regulatory oversight, any oversight in any link—or negligence toward details—could become a fuse that ignites compliance risk.

According to multiple institutional professionals interviewed, this fierce wave of public-fund penalty notices in 2025—from the pain of directly stopping core business, to the intense “tapping” of leading giants, and then to accountability for individual executives—shows that regulators, through their actions, have declared the end of an era of “barbaric growth” in which compliance was disregarded.

As the 2025 annual reports for public funds are still being disclosed, industry penalty notices continue to surface, and Economic Observer reporters will continue tracking and reporting.