November 30 -- The China Securities Regulatory Commission (CSRC) reviewed the work done by the underwriters, law firms and auditors involved in the initial public offerings of Hunan Shengjinshanhe Bio Technology (RCode:002525:) and Dalian Kemian Wood Industry (002354.SZ), and meted out punishments for securities law violations, reports caijing.com.cn.

The CSRC gave a warning to Ping An Securities, the underwriter of Hunan Shengjing Shanhe Biotechnology's initial public offering, and revoked the licenses of two representatives for not being thorough in conducting due diligence, with incomplete information regarding Shanhe Biotechnology's customers, related parties, and sales figures.

The representatives handling the underwriting did not conduct interviews with the five largest customers of Shanhe Biotechnology, nor did they verify the work of the auditors.

The audit and law firms involved were also given warnings. Shanhe Biotechnology was prevented from going ahead with its initial public offering the night before it was scheduled to take place in April, for offences ranging from the failure to disclose related party transactions and information on procurement involving three direct sales clients.

The securities law violations by Minsheng Securities on its underwriting of Kemian Wood Industry’s (002354) initial public offering, were similar. Two representatives from Minsheng Securities were suspended for three months for omitting relevant information in the underwriting.

Separately, the CSRC has adopted six new measures governing the initial public offering underwriting process, with measures to be taken to step up checks on the underwriting institutions and the imposition of penalties on underwriting institutions and their representatives when securities laws are violated. 

The CSRC had given oral warnings to 54 underwriting institutions thus far this year.