China Securities, the sixth-largest brokerage in mainland China, has found itself in a tight spot after an intern leaked information about its clients, causing yet another stir in the country’s embattled securities industry.
The Beijing-based brokerage said in a statement on Friday that a video clip containing the company’s name and logo was filmed by an intern without permission.
“The content of the clip leaked sensitive information about our customers and violated the company’s compliance rules,” China Securities said. “We have launched a procedure to hold relevant people accountable for the mistake.”
The company said it would strengthen internal management and introduce disciplinary actions to ward off such leaks in the future.
At least two documents about clients’ fundraising plans were contained in the short video clip of a university student showing his internship experience at China Securities. The logo of another client is also visible in the video.
The video clip went viral on the mainland’s major social media platforms including Douyin and Xiaohongshu, with thousands of users leaving comments that questioned the company’s professionalism.
An intern at China Securities unintentionally leaked information about the company’s clients. Photo: Handout
“The securities sector, due to a beleaguered stock market, has been surrounded by criticism as millions of retail investors are licking their wounds,” said Wang Feng, chairman of Shanghai-based financial services group Ye Lang Capital.
“A lack of oversight caused the leak and exposed China Securities’ chaotic management.”
The benchmark Shanghai Composite Index, which fell below the psychologically important 3,000-point level on June 21, has languished below the threshold amid a crisis of confidence. On Friday, the gauge rose 0.1 per cent to 2,890.90.
Institutional and individual investors are expecting a further decline in key indicators, battered by worries of weakening consumer sentiment, falling housing prices and slumping foreign investment.
Securities firms have been badly exposed to the poorly performing A-share market. They have seen brokerage fees fall and income drop from investment banking businesses.
Of the 24 securities companies trading on the Shanghai and Shenzhen stock exchanges, 16 have issued profit warnings for the first half of 2024. Their net profit from January to June could turn out to be lower than the same period last year.
Beijing’s efforts to reverse the slide in mainland-listed A shares, one of the worst performers worldwide this year, has proved to be unsuccessful as the market downturn has further eroded the wealth of the nation’s 220 million investors.
The financial service industry, which is seen as elite in China, pays lofty salaries to employees, but it does not align with President Xi Jinping’s initiative of common prosperity, which stresses equitable wealth distribution at a time when the nation is facing economic headwinds.
Top regulators plan to cap the annual salaries of financial workers at around 3 million yuan (US$413,702), as part of a campaign to eradicate extravagance and hedonism from the industry and narrow the wealth gap, sources said.
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