As China's registration-based IPO system advances, regulators are intensifying scrutiny of intermediaries' "gatekeeper" responsibilities with unprecedented rigor.
On March 20, 2026, the Shanghai Securities Regulatory Bureau issued a formal warning against the newly merged securities giant Guotai Haitong Securities Co., Ltd. (601211). The disciplinary action stemmed from serious professional misconduct in sponsorship work for Puli Pharmaceutical projects originally handled by Haitong Securities prior to the merger. This regulatory measure represents more than a routine penalty—it signals a critical test of internal controls during the integration phase of this "aircraft carrier" brokerage firm.
The controversy traces back to Hainan Puli Pharmaceutical Co., Ltd., which has since been delisted due to financial fraud. According to regulatory disclosures, the former Haitong Securities (now merged into Guotai Haitong) served as sponsor for Puli Pharmaceutical's 2020 private share placement and 2021 convertible bond issuance, committing four major violations during ongoing supervision:
- Inadequate verification procedures for identifying abnormal situations requiring attention - Significant irregularities in project team members' professional conduct - Deficiencies in internal quality control and compliance mechanisms - Inaccurate conclusions in ongoing supervision reports and special verification opinions
The lead sponsor representative Tian Jia also received individual disciplinary warnings for direct responsibility in the case.
The severity of these penalties becomes clear when examining Puli Pharmaceutical's fraud scale. Investigation results reveal the former ChiNext market star fabricated pharmaceutical sales revenue totaling 10.29 billion yuan and inflated profits by 6.69 billion yuan between 2021-2022. Notably, 86.36% of its reported 2022 profits were fabricated. As sponsor, Haitong Securities should have been the primary defense against fraud, yet its supervision reports failed to flag risks while providing "accurate" conclusions, causing substantial investor losses. Investor compensation cases are currently proceeding.
Ironically, Puli Pharmaceutical's delisting hasn't ended the fallout. In April 2026, Guotai Haitong issued risk warnings as designated post-delisting broker, noting Puli's inability to disclose 2025 annual reports—indicating complete breakdown of internal controls and disclosure systems. This creates a continuous pattern of professional failures spanning IPO sponsorship, ongoing supervision, and deligation management.
The merger between Guotai Junan and Haitong Securities was intended to create a top-tier investment bank, but the Puli case demonstrates that scale doesn't automatically translate to risk management capabilities. Over the past year, Guotai Haitong has faced multiple investment banking controversies beyond Puli Pharmaceutical:
- Zhongding Hengsheng's IPO project received disciplinary notices from Shenzhen Stock Exchange, with sponsors barred from filing applications for six months due to failures in verifying internal control deficiencies and fund flows - Overseas subsidiaries faced regulatory challenges in Hong Kong in March 2026, exposing compliance coverage gaps
For the newly merged firm aspiring to become a premier investment bank, the Puli case serves as a stark warning. Under current stringent oversight, regulators now extend investigations from companies to intermediaries, ending the era of nominal sponsorship without substantive oversight. Guotai Haitong must thoroughly address risk assets inherited from Haitong Securities and demonstrate its expanded investment banking system can balance scale with compliance—otherwise, this warning may mark not an endpoint, but a beginning.