A penalty notice has once again placed Orient Securities Company Limited (600958.SH), with assets totaling 437.358 billion yuan, under the spotlight. Due to failure to fulfill due diligence responsibilities, the Beijing Stock Exchange (BSE) issued warning letters to Orient Securities and related personnel.

This marks the third penalty the company has received within five months: In April, Orient Securities was issued a written warning by the Shenzhen Stock Exchange for regulatory violations in the Robotech merger project (300757.SZ); In June, the company's sponsor representatives faced self-regulatory measures from BSE for "duty violations," involving sponsor representatives Li Fangzhou and Lv Xiaobin, who jointly sponsored the BSE project Dapeng Industrial.

In the first half of the year, Orient Securities delivered impressive results: net profit surged to 3.4 billion yuan, with year-on-year growth exceeding 60%. However, behind this strong performance growth, regulatory warning signals are emerging continuously. From Shenzhen Stock Exchange's written warnings to BSE's self-regulatory measures, the penalties expose challenges in risk control amid investment banking business expansion.

**Three Penalties This Year! 29 Sponsorships with 7 Withdrawals, 4 BSE Projects Suspended**

The specific reasons and projects involved in this BSE self-regulatory measure against Orient Securities have not been disclosed.

Research shows that among BSE listings and Orient Securities' IPO project list, Dapeng Industrial, primarily engaged in R&D and manufacturing of industrial precision cleaning equipment, first applied for listing on ChiNext in 2020, sponsored by Shenwan Hongyuan Securities with sponsor representatives Liu Zhibo and Sun Ping. In June 2023, it switched to BSE with Orient Securities as the new sponsor, with sponsor representatives Li Fangzhou and Lv Xiaobin who were penalized by BSE in June. On August 15, Dapeng Industrial's BSE IPO was approved; on September 5, the company submitted its registration application to BSE and is currently in the final pre-listing phase.

Dapeng Industrial's IPO journey has been turbulent. Previously, due to audit firm qualification penalties, the company changed accounting firms again during the IPO period and switched lead underwriters multiple times. This time, the IPO sponsor representatives also faced BSE self-regulatory penalties.

According to reports, Dapeng Industrial's prospectus contained inconsistent information disclosure. The prospectus shows that Shimada Kasei Co., Ltd. was once Dapeng Industrial's controlling shareholder, while Shimada Ryojiro, son of Shimada Kasei's actual controller, was a minority shareholder of Shimada Chemical Machinery, a formerly controlled subsidiary of Dapeng Industrial during the reporting period. Therefore, Dapeng Industrial disclosed Shimada Kasei as a related party.

The ChiNext prospectus showed 2020 sales to Shimada Kasei at 22.223 million yuan; the public transfer statement when applying for NEEQ showed this figure as 24.495 million yuan; the BSE prospectus changed this data to 22.3164 million yuan.

Among the two sponsor representatives penalized by Orient Securities in June, Lv Xiaobin joined Orient Securities from Shenwan Hongyuan in August 2023, while Li Fangzhou joined Orient Securities in late March 2023 after working at Minmetals Securities from late February 2022 for one year, which was Dapeng Industrial's NEEQ sponsor. Both representatives became Dapeng Industrial's BSE IPO sponsors in November of the same year.

Wind data shows that over the past year (as of October 11), Orient Securities and its absorbed subsidiary Orient Securities Underwriting & Sponsorship Co., Ltd. participated in a total of 29 sponsored projects, with 7 being withdrawn.

Research indicates that among the 7 IPO projects sponsored by Orient Securities for BSE listing, 1 has been issued, 4 enterprises have suspended review, and 2 enterprises are under inquiry. Sponsored projects include the issued Zhejiang Zhigao Machinery, Qiaoluming Technology (under inquiry), Shanghai Denair Energy Saving Technology (third inquiry), Yaotai Co. (suspended review), Zhengzhou New Century Digital Technology (suspended review), Shanghai Fengtian Electronics (suspended review), and Zhongyu Tiexin Transportation Technology (suspended review).

Recently suspended Shanghai Fengtian Electronics is engaged in R&D, production, and sales of automotive electronic products. In June 2025, the company's IPO application was accepted by BSE, with sponsor representatives Lu Guochun and Zhu Wei. The company previously attempted to list on STAR Market but withdrew in 2022.

On January 15, 2025, Shanghai Fengtian Electronics faced self-regulatory measures from the National Equities Exchange and Quotations for information disclosure violations. The main reason was that during the 2022 self-organized issuance period, then-deputy general managers Wu Haifeng and Xue Shengli, and then-supervisor Liu Xiangguo held company shares on behalf of others. Both Fengtian Electronics and the three individuals were penalized.

Additionally, while Fengtian Electronics' 2024 net profit grew significantly by 148.45% year-on-year, growth slowed in the first half of 2025. BSE issued an audit inquiry letter to Fengtian Electronics on July 23, raising nine core questions and specifically alerting investors to "control stability and equity holding arrangements," "authenticity and reasonableness of 2024's significant performance growth," and "necessity and rationality of fundraising projects."

The main reason for the suspended reviews of Zhengzhou New Century Digital Technology, Yaotai Co., and Zhongyu Tiexin was that financial statements cited in their prospectuses exceeded validity periods without updates, leading to suspension requests under BSE regulations.

Zhongyu Tiexin's suspended review occurred on September 30. On July 28, BSE issued an inquiry letter to Zhongyu Tiexin, directly addressing issues including insufficient shareholder information disclosure, business sustainability, and related-party competition.

Since this year, BSE has strictly controlled IPO admission standards, implementing multiple measures for strict supervision of corporate IPO activities, enforcing "accountability upon application" requirements, and pressing intermediaries' "gatekeeper" responsibilities.

**11 Sponsor Representatives Penalized in One Year, Investment Banking Staff Reduced by 20%**

As early as June 2021, Orient Securities proposed absorbing and merging its investment banking subsidiary Orient Securities Underwriting & Sponsorship Co., Ltd., with the plan approved by CSRC in March 2023.

By September 2024, Orient Securities completed the absorption and merger, with Orient Securities Underwriting & Sponsorship's existing clients and businesses migrating entirely to Orient Securities. However, China Securities Association data shows that since the merger, including the aforementioned Li Fangzhou and Lv Xiaobin, Orient Securities has had 11 sponsor representatives with penalty records.

Specifically, on May 20, 2025, Orient Securities' Bian Jin and Liang Jun received self-regulatory penalties from Beijing Stock Exchange.

According to records, Bian Jin is a director and sponsor representative of Orient Securities, with legal professional qualifications and non-practicing CPA certification, holding a master's degree. Bian Jin joined Minsheng Securities in 2015, became a sponsor representative after 2020, and joined Orient Securities Underwriting & Sponsorship Co., Ltd. in March 2023.

Liang Jun currently serves as managing director and sponsor representative of Orient Securities, holding a master's degree. Before joining Orient Securities, Liang Jun worked at Minsheng Securities for 17 years, serving as an experienced "investment banking veteran" who held positions including executive general manager of Minsheng Securities' Investment Banking Division, internal audit committee member, and sponsor representative.

The penalty for Bian Jin and Liang Jun was related to the Denair Energy Saving Technology (Shanghai) Co., Ltd. sponsorship project.

On June 25, Denair responded to BSE's second round of inquiries, with regulatory attention focused on business sustainability and decline risks, related-party transactions and competition, and sales revenue verification adequacy. When Orient Securities responded to Denair's second round of inquiries on August 8, the signing sponsor representatives were Bian Jin and Liang Jun.

BSE information shows that on September 30, BSE issued a third round of inquiry opinions on Denair's IPO application documents, mainly focusing on business sustainability and information disclosure accuracy. The project's latest audit status is "suspended."

Additionally, in May, Liang Jun was also penalized for the Guangdong Audiowell Electronics Co., Ltd. sponsorship project.

On April 17, the Shenzhen Stock Exchange disclosed that Orient Securities and two M&A project sponsors Cheng Jiaan and Luo Hongyu received written warning self-regulatory measures. Regarding specific violations, in 2023, Robotech planned to acquire relevant equity in Fycontrol, FSG, and FAG through share issuance and cash payments, but the listed company failed to timely disclose information affecting investor decisions in the restructuring report. Orient Securities was aware of the relevant agreement signing during due diligence but failed to adequately fulfill due diligence responsibilities and did not supervise the listed company's timely disclosure.

Furthermore, in September 2024, Shandong Securities Regulatory Bureau disclosed that Orient Securities Underwriting & Sponsorship, as the sponsor for Gongda Electronics' private placement project, had sponsor representatives Zhu Zhenggui and Liu Xu issued warning letters for failure to fulfill due diligence responsibilities.

Regarding frequent penalties for sponsor representatives, Xiangson Capital director Shen Meng pointed out, "Under current intense competition, securities firm practitioners, driven by interests, have relaxed or even ignored risk control and compliance constraint mechanisms, as regulation increases operating costs and weakens securities firm performance."

Additionally, Orient Securities' investment banking department has seen significant staff reduction. China Securities Association data shows that in May 2024, Orient Securities Underwriting & Sponsorship had nearly 250 registered sponsor representatives; after Orient Securities absorbed the subsidiary, currently only 195 sponsor representatives are registered, a decline of over 20%.

Zhi Peiyuan, enterprise mentor for professional master's degree graduate students at China University of Mining and Technology (Beijing) Management School, stated that investment banking staff reduction "can optimize labor costs, reduce inefficient sponsor representative expenses, and improve per capita project output. On the other hand, the loss of experienced sponsor representatives may affect project quality, especially complex IPO acquisition capabilities. The number of sponsor representatives is directly related to project reserves, and staff reduction may also lead to market share decline."

**Earned 3.4 Billion in Half Year, but Star Subsidiary "Dragged Down" by 400 Million Yuan Lawsuit**

While facing repeated penalties, Orient Securities' performance has been impressive.

In the first half of 2025, the company achieved operating revenue of 8.001 billion yuan, up 38.8% year-on-year; net profit attributable to shareholders reached 3.463 billion yuan, up 64.02% year-on-year. In business performance, investment banking fee income reached 720 million yuan in the first half of 2025, up 31.62% year-on-year, with equity underwriting scale significantly improved.

Wind data shows that in the first half of 2025, Orient Securities completed 10 equity financing deals, ranking 6th in the industry by issuance volume; bond underwriting total scale reached 277.948 billion yuan, up 28% year-on-year, ranking 9th in market share.

Additionally, wealth and asset management operating revenue was 2.566 billion yuan, up 16.9% year-on-year.

Orient Securities mainly conducts securities asset management business through Orient Fund Management Co., Ltd. Wind data shows it ranks 41st among 198 public fund management institutions, with non-monetary fund scale of 149.668 billion yuan, ranking 33rd.

However, in August this year, the company filed an appeal against Jianyuan Trust Co., Ltd. (600816.SH) involving 402 million yuan, with the second trial currently accepted. From first trial filing to judgment took nearly five years. As of the end of the first half, Orient Fund Management's total asset management scale was 233.781 billion yuan, up 7.9% from the end of 2024, but compared to 258.235 billion yuan at the end of 2021, it has shrunk by about 30% over four years.

In an increasingly strict regulatory environment with more rational investors, how will Orient Securities repair risk control gaps while achieving strong performance growth? After all, for securities firms, compliance is the more sustainable lifeline.