China’s securities regulator promised on Friday to crack down more forcefully on financial fraud, stating that it is advocating for more severe penalties for offenders in an effort to restore faith in the nation’s faltering stock markets.

A set of rules against capital markets cheating was jointly released by the China Securities Regulatory Commission (CSRC) and five other government organisations. This is the latest attempt to address a pervasive problem that has beset the second-largest stock market in the world.

The announcement, which called for concerted actions against corporate fraudsters and those who support them, was made at the same time as regulators were looking into PricewaterhouseCoopers’ (PwC) involvement in China Evergrande Group’s auditing after the company’s primary China business was shown to be dishonest.

In the joint statement, the CSRC stated that “financial fraud seriously disturbs capital market order and shakes investor confidence.”

It said that regulators will “punish accomplices,” “go after chief evils,” and undertake systematic, all-encompassing measures to combat fraud.

In an attempt to prevent misbehaviour, the CSRC stated that it has been attempting to amend legislation in order to impose more severe penalties.

According to the watchdog, for instance, companies that make false declarations may now be fined up to 10 million yuan ($1.38 million) instead of the previous 600,000 yuan ($82,568).

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In the meanwhile, the maximum sentence for violators of disclosure regulations is 10 years in jail, as opposed to the prior three years.

According to the CSRC, intermediaries who disseminate fraudulent documents may potentially face a 10-year prison sentence.

(Adapted from Reuters.com)

Categories: Economy & Finance, Regulations & Legal, Strategy