CHINA’S market watchdog ordered Hithink RoyalFlush Information Network to suspend its investment advisory service unit from adding new clients for three months as its live streaming business failed to comply with the securities rules.
The Hangzhou-based financial data and software company, which also enables stock trading in China, was being penalised partly because some influencers on its platform were offering investment advice without the required licences, the company said in an exchange filing citing the disciplinary note from the China Securities Regulatory Commission (CSRC). Those influencers also gave implicit recommendation of individual stocks during live streaming.
The regulator also criticised the company’s insufficient compliance control when collaborating with securities companies to provide investment consulting services.
Hithink RoyalFlush pledged to “reflect deeply and make timely corrections” in order to resume taking new customers as soon as possible. It added that the investment advisory service only accounted for 199 million yuan (S$37 million), or 5.6 per cent, of its consolidated operating income in its 2023 financial year. It does not expect the CSRC’s disciplinary action to impact its 2024 earnings.
Shares of the company tanked 14.3 per cent on the Shenzhen exchange on Friday (Nov 15), the most in more than a month.
Chinese regulators have been clamping down on influencers and livestreaming platforms for offering investment advice to retail investors without holding the appropriate licences, local media China Securities Journal reported earlier this week.
This is not the first time Hithink RoyalFlush has been under scrutiny. CSRC investigated the firm for potential violations of securities and futures law in 2015. The company, which was founded in 2001, has more than 5,000 staff in China. Its clients include brokers, mutual and private funds, banks, insurance companies and retail investors. The firm’s net income fell 7.5 per cent year on year to 288 million yuan on revenue of 945 million yuan in the third quarter. BLOOMBERG
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