Some securities practitioners in the market use professional stock trading, promises of guaranteed returns, and agreed income sharing to deceive customers into trusting them, thus privately managing assets for investors and engaging in illegal financial activities on behalf of clients. However, when investment losses occur, conflicts and disputes often arise, and the fact that employees violate financial regulations on behalf of clients also emerges.
A former employee of the business department of a securities firm A (holding the Stockbroker's practice certificate) privately signed a cooperative financial management agreement with customer B of the business department, agreeing that he would buy and sell securities for 600000 funds in the customer's account, with a mandate period of 12 months (from March 17, 2015 to March 17, 2016). During the contract period, if the account generates more than 20% profit, it shall enjoy 20% of the profit portion. If the profit does not exceed 20%, all profits shall belong to the customer; If the loss exceeds 20%, the customer has the right to terminate the agreement or allow them to provide free services until profitability. Due to severe account losses, both parties terminated the agreement in advance. Practitioner A has acknowledged the above violation facts in writing to the local securities regulatory bureau. A. A certain person engaged in securities investment and wealth management on behalf of clients without authorization and agreed to share the investment income. His behavior has constituted the behavior of wealth management on behalf of clients. In violation of the Securities Law, the Interim Provisions on the Administration of Stockbroker, the Practice Standards of Stockbroker (for Trial Implementation) and the Code of Conduct for Securities Practitioners, the CSRC has taken administrative supervision measures to issue a warning letter to him. The China Securities Association has taken disciplinary measures against securities practitioner A in accordance with the relevant provisions of the "Rules for Handling Self regulatory Supervision Cases" and the "Measures for Implementing Self regulatory Management Measures and Disciplinary Actions". However, investor B blindly believed in the promises of employee A and ultimately suffered damage to his own property.
Securities practitioners engaging in securities investment and wealth management on behalf of clients refer to the behavior of securities company employees privately accepting clients' commissions and acting as agents for clients to engage in securities investment and wealth management.
Article 143 of the Securities Law stipulates that securities companies handling brokerage business shall not accept customers' full authorization to decide on securities trading, choose securities types, determine the quantity or price of securities trading; Article 144 stipulates that securities companies shall not make commitments in any way to the profits from or compensation for losses from customer securities trading; Article 145 stipulates that securities companies and their employees shall not privately accept clients' commissions to buy or sell securities without passing through their legally established business premises.
Article 13 of the Interim Provisions on the Administration of Stockbroker (hereinafter referred to as the Interim Provisions) stipulates that Stockbroker shall practice within the scope of the provisions of Article 11 of these Provisions and the authorization of securities companies, and shall not commit the following acts: (1) handle account opening, cancellation, transfer, securities subscription, trading or capital deposit, transfer, inquiry, etc. for clients （3） Agree to share investment returns with clients, and make a commitment to the profits from securities trading or compensate for losses from securities trading.
Article 20 of the Stockbroker Practice Standards (for Trial Implementation) stipulates that Stockbroker shall practice within the scope of the provisions of Article 11 of the Interim Provisions and the authorization of the securities companies they serve, and shall not have any acts prohibited by Article 13 of the Interim Provisions; Article 32 stipulates that employees of securities companies engaged in securities brokerage business marketing activities shall follow this standard.
Article 1 of the Code of Conduct for Securities Practitioners stipulates that practitioners should consciously abide by the rules and regulations of their institution, as well as the recognized professional ethics and codes of conduct in the industry.
From this case, we can see that investors must clearly distinguish between the asset management business of securities companies and the illegal financial management behavior of practitioners. According to Article 45 of the Regulations on the Supervision and Administration of Securities Companies, securities companies may engage in securities asset management business of accepting clients' entrustment and using clients' assets for investment in accordance with the provisions of the Securities Law and these Regulations. The profits generated by the investment are enjoyed by the client, and the losses are borne by the client. The securities company may charge management fees according to the agreement. A securities company engaged in securities asset management business shall sign a securities asset management contract with its clients, specifying the investment scope, investment ratio, management period, and management fees. Securities asset management business belongs to corporate behavior, with the securities company as the main body and investors signing relevant asset management contracts in writing. The practice of financial management on behalf of clients by practitioners belongs to the personal behavior of practitioners, generally involving the signing of relevant contracts or verbal agreements between practitioners and investors in private. At present, securities companies strictly prohibit employees from engaging in illegal financial activities on behalf of customers, and have taken a series of strict preventive measures. They have also fully disclosed risks during the process of telephone follow-up with investors. In such a situation, if the investor still privately entrusts practitioners to manage their financial affairs, it is generally recognized as the personal behavior of the practitioners. Once the investor incurs losses due to illegal financial management on behalf of clients, the investor can only claim rights from the practitioners.
Investors should not blindly believe in employees' illegal commitments, but should maintain a rational investment philosophy and strive to improve their professional knowledge and experience. Investors can only effectively prevent risks and obtain investment returns by continuously learning, understanding various business rules and products in the securities market, analyzing market information, making independent judgments, and accumulating investment experience.
