In recent days, news of another top investment banker on the mainland being taken away by relevant authorities and going missing has caused a stir in the securities industry, shocking the capital circle. The missing executive was reportedly a former official at the China Securities Regulatory Commission and during his tenure, several projects at Dongxing Securities encountered issues.
On the morning of November 15th, reports emerged about the missing executive, identified as Zhang Jun, the vice president of Dongxing Securities overseeing investment banking operations, according to a report by Jiemian News.
In the afternoon of the same day, Dongxing Securities issued a statement announcing that Zhang Jun, a director and vice president of the company, had submitted his resignation due to personal reasons, stepping down from the positions of the 6th Board of Directors, the Special Committee of the Board of Directors, and the Vice President.
It is reported that it is not yet clear whether Zhang Jun’s resignation was in coordination with an ongoing investigation or due to personal misconduct issues.
Public information shows that Zhang Jun, born in May 1975, is currently 50 years old. Previously, he served at the China Securities Regulatory Commission in the Issuance and Supervision Department, holding various positions such as officer, deputy researcher, and deputy director of a division.
Zhang Jun served as the Chief Risk Officer at Dongxing Securities from September 2015 to October 2018, then as Vice General Manager from August 2018 to the present and also as a director of Dongxing Securities. Additionally, he was in charge of the investment banking business and served as a director of Dongxing Hong Kong, which is engaged in investment banking and asset management services.
According to Lanjing News, Zhang Jun continued to serve as Vice General Manager of the company. During the board turnover at Dongxing Securities in October of this year, Zhang Jun was elected as a director for a term of three years and also continued as Vice General Manager of Dongxing Securities. Following Zhang Jun’s resignation, Dongxing Securities still has four Vice General Managers in position.
Financial blogger “Jinshizatan” stated that the case of Zhang Jun being missing and several high-ranking officials from the issuance review department being investigated could be connected, possibly stemming from the unfolding Zhu Congjiu case.
Zhang Jun previously handled the issuance review work at the China Securities Regulatory Commission, mainly focusing on IPO listings. Under Zhang Jun’s management, the investment banking business at Dongxing Securities transitioned from rapid growth to significant losses, being implicated in fraudulent issuances, suggesting a possible link between Zhang Jun’s disappearance and issues in new stock offerings.
The article also analyzed potential issues that Zhang Jun might be involved in.
Corruption in issuance and the transfer of benefits undoubtedly became a focus of regulatory scrutiny. Since last year, from Feng Henian, Wang Zongcheng, Zeng Changhong to Bao Fan, Cong Lin, Wang Qingshan, Zhu Congjiu, everything points to one thing – the issuance work of regulatory institutions.
Recently, a wave of investigations has targeted officials from the issuance review department:
1. On October 16th, Yang Jiaohong, former director of the Issuance Department of the China Securities Regulatory Commission, who had been unreachable for a long time, was investigated. He had served in the issuance review department of the CSRC for nearly 20 years, holding the position of director of four divisions. He suddenly resigned in 2016 and disappeared from public view since.
2. On November 15th, Li Xiaoqiang, former deputy director of the Issuance Department of the CSRC, announced being under investigation. He joined the CSRC in 1998, working for the organization for 20 years, and held important positions such as Deputy Director of the Shanghai Securities Regulatory Bureau, Deputy Director of the Accounting Department, and Deputy Director of the Issuance Department.
It is reported that Li Xiaoqiang had been a member of the first panel to review the ChiNext board since 2009, working alongside then-Deputy Chairman Zhu Congjiu for many years. At that time, Li Xiaoqiang was the Deputy Director of the Issuance Department, while Zhu Congjiu was the Deputy Chairman of the CSRC, a member of the Party Committee, Deputy Director of the Issuance Department, Li Xiaoqiang’s direct superior, and also the superior of Zhang Jun, who was serving as deputy director in the review department.
Zhu Congjiu can be described as a paradigm of corruption within regulatory and financial systems. Starting at the CSRC in November 1992, until he transferred to Deputy Governor of Zhejiang Province in May 2012, he spent nearly 20 years at the CSRC and Shanghai Stock Exchange. In 2012, Zhu Congjiu was promoted to Deputy Governor, overseeing state assets and finance. After ten years, he resigned in June 2022. In January 2023, Zhu Congjiu was elected as the Vice Chairman of the Zhejiang Provincial Political Consultative Conference, but was investigated and dismissed from the position after just over three months in office.
Known as the “financial big tiger,” Zhu Congjiu’s downfall is closely related to his work in the issuance review department. During his 13 years at the CSRC, 10 years at the SSE, and 10 years in the Zhejiang financial system, he oversaw the listing of numerous companies. Under his leadership, there were irregular listings like those of Pacific Airlines, as well as the shocking sale of warrants domestically and internationally.
Zhang Jun joined Dongxing Securities in September 2015 as the Chief Risk Officer with an annual salary of 672,900 yuan. However, his salary skyrocketed afterward, reaching 5.28 million yuan in 2021, making him one of the highest-paid executives at Dongxing Securities.
By 2022, the company’s performance took a nosedive. Operating income plummeted to 3.429 billion yuan, down by 36.21% year-on-year, and net profit attributed to shareholders shrank significantly to 517 million yuan, a 68.70% decrease.
Subsequently, the company implemented substantial pay cuts, with Zhang Jun’s salary reduced by over 4 million yuan. However, even with this adjustment, Zhang Jun’s compensation remained among the top three within Dongxing internally.
Of note, during Zhang Jun’s tenure overseeing investment banking operations, Dongxing Securities encountered setbacks in several underwriting and sponsorship businesses.
Since 2023, Dongxing Securities has been frequently involved in IPO controversies. On March 31, 2023, Dongxing Securities received a “Notice of Filing” from the CSRC for alleged negligence in underwriting, continuous supervision, and other duties.
In 2023, the fraudulent issuance case of Zeda Yisheng, sponsored by Dongxing Securities, emerged, combined with the regulatory adjustment of IPOs in the opposite direction. The sponsorship fees of Dongxing Securities plunged to 146 million yuan, with new stock fundraising reaching 2.087 billion yuan, affecting the equity financing business.
In April 2023, Dongxing Securities disclosed that it had been accused of negligence in the execution of the Zeda Yisheng’s first public offering and debut on the ChiNext board, triggering the CSRC’s investigation.
Additionally, in the bond underwriting business, Dongxing Securities faced issues of inadequate custody responsibilities. In April 2024, the company received a written warning from the Shanghai Stock Exchange for failing to fulfill its duties as the trustee for two bond issues, “2 Lanlv 02” and “22 Lanlv 03.”
In November 2023 and January 2024, Dongxing Securities received administrative supervisory measures in the form of warning letters from the Gansu regulatory authority and the CSRC for inadequate performance in bond business responsibilities.
In 2023, the investment banking revenue of Dongxing Securities was 350 million yuan, a 61.45% drop from 2022, with an investment banking profit of 57 million yuan, an 83.48% decline.