Incorporating long-term investment returns of investors into assessments has become an important responsibility of fund distribution institutions.
On March 2, the Xinjiang Regulatory Bureau of the China Securities Regulatory Commission disclosed its decision to impose corrective measures on Urumqi Bank.
The decision mentioned that Urumqi Bank had multiple violations, including failing to report the appointment materials of the head of the fund sales department to the local securities regulatory bureau as required, and not including long-term investment returns of investors in the assessment and evaluation index system for branches and fund sales personnel.
Especially the latter, which led to the punishment of a city commercial bank, is indeed rare in the industry.
<h2>Involved in Multiple Fund Distribution Violations</h2>
The decision from the Xinjiang Securities Regulatory Bureau indicated that Urumqi Bank's fund sales business had the following issues:
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<li>
Failed to report the appointment materials of the head of the fund sales department to the Xinjiang Securities Regulatory Bureau as required, violating Article 11, Paragraph 1, and Article 56, Paragraph 1, Item 3 of the &#34;Supervision and Administration Measures for Directors, Supervisors, Senior Management Personnel and Practitioners of Securities and Fund Operating Institutions&#34; (CSRC Order No. 195).
</li>
<li>
Failed to report the resignation review report of the head of the fund sales department to the Xinjiang Securities Regulatory Bureau as required, violating Article 10 of the &#34;Guidelines for the Content of Resignation Audits and Review Reports for Fund Industry Personnel&#34; (CSRC Announcement [2020] No. 20).
</li>
<li>
Failed to include long-term investment returns of investors in the assessment and evaluation index system for branches and fund sales personnel, violating Article 30, Paragraph 1 of the &#34;Supervision and Administration Measures for Publicly Raised Securities Investment Fund Sales Institutions&#34; (CSRC Order No. 175).
</li>
<li>
Did not timely apply for a new license after changes occurred in the recorded matters of the &#34;Securities and Futures Business License,&#34; violating Article 5, Paragraph 3 of the &#34;Regulations on the Implementation of the 'Supervision and Administration Measures for Publicly Raised Securities Investment Fund Sales Institutions'&#34; (CSRC Announcement [2020] No. 58).
</li>
<li>
Some personnel engaged in the operation and maintenance of the fund sales information management platform did not obtain fund practitioner qualifications, violating Article 17, Paragraph 1 of the &#34;Regulations on the Implementation of the 'Supervision and Administration Measures for Publicly Raised Securities Investment Fund Sales Institutions'&#34; (CSRC Announcement [2020] No. 58).
</li>
</ol>
<h2>Recorded in the Integrity Archives of the Securities and Futures Market</h2>
According to Article 51, Paragraph 1 of the &#34;Supervision and Administration Measures for Directors, Supervisors, Senior Management Personnel and Practitioners of Securities and Fund Operating Institutions&#34; (CSRC Order No. 195) and Article 53 of the &#34;Supervision and Administration Measures for Publicly Raised Securities Investment Fund Sales Institutions&#34; (CSRC Order No. 175), the Xinjiang Securities Regulatory Bureau decided to impose corrective supervision and management measures on Urumqi Bank and record it in the integrity archives of the securities and futures market.
The decision also required Urumqi Bank to attach great importance to strengthening compliance management of fund sales business, strictly adhere to relevant laws and regulations on fund sales, take practical and effective rectification measures, and submit a written rectification report to the Xinjiang Securities Regulatory Bureau within 30 days of receiving the decision letter. The Xinjiang Securities Regulatory Bureau will conduct inspections and acceptance checks as necessary
<h2>Focus on Long-term Investment Returns for Investors</h2>
It is worth mentioning that in this violation by Bank of Urumqi, it includes not incorporating long-term investment returns for investors into the assessment and evaluation index system for branch institutions and fund sales personnel, which is a relatively rare violation.
Previously, regulatory authorities have repeatedly emphasized that the &#34;long-cycle assessment&#34; reform in the public fund industry involves not only fund companies but also fund sales institutions.
In the action plan for promoting the high-quality development of public funds released by the China Securities Regulatory Commission last year, it mentioned, &#34;Urge fund sales institutions to improve internal assessment and incentive mechanisms, and increase the assessment weight on the profit and loss situation of retained investors.&#34;
This punishment is also an implementation of the specific requirements of the above action plan.
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Urumqi Bank was penalized by the China Securities Regulatory Commission for not including long-term investor returns in its assessment system. The bank has multiple violations, including failing to report the appointment materials of the head of the fund sales department, not reporting the resignation review report, and not including long-term investment returns in the assessment indicators. This penalty is relatively rare in the industry, indicating a strong regulatory oversight of fund distribution institutions

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The long-term returns of investors have not been included in the sales assessment evaluation system, resulting in a "penalty" for a city commercial bank