Article 176 The securities industry association shall perform the following functions:

(1) to enable members to understand and adhere to the laws and administrative regulations governing securities;

(2) to safeguard the lawful rights of members according to laws and to present their suggestions and requests to the securities regulatory authority pursuant to law;

(3) to collect and sort out information on securities in the service of members;

(4) to formulate rules for members to follow, to organize vocational training among the employees of member units, and to promote professional exchange among members ;

(5) to mediate disputes over securities business that arise among members or between members and their clients;

(6) to organize members to study the evolution, operation and related topics of the securities industry;

(7) to supervise and inspect the behaviors of members and to impose disciplinary sanctions on the members for their violation of laws, administrative regulations or the charter of the association; and

(8) such other functions as may be so prescribed in the charter of the securities industry association.

Article 177 The securities industry association shall have a board of governors. The members of the board of governors shall be elected in accordance with provisions of the charter of the association.

Chapter X Securities Regulatory Authority

Article 178 The securities regulatory authority under the State Council shall exercise regulation over the securities markets, maintain order of the markets and ensure the lawful operation of the markets pursuant to law.

Article 179 The securities regulatory authority under the State Council shall perform the following functions in exercising regulation over the securities markets:

(1) to formulate regulations and rules for the regulation of the securities markets and exercise the power of examination or approval pursuant to law;

(2) to exercise the regulation over the issuance, listing, trading, registration, depository and clearance of securities pursuant to law;

(3) to exercise regulation over the securities business of securities issuers, listed companies, securities companies, management companies of securities investment funds, securities service institutions, stock exchanges and securities registrar and clearance institutions pursuant to law;

(4) to formulate the standards for the qualifications and code of conduct for professionals in the securities business pursuant to law, and to supervise the implementation thereof;

(5) to supervise and inspect, pursuant to law, the publication of information concerning the issuance, listing and trading of securities;

(6) to guide and supervise the activities of the securities industry association pursuant to law;

(7) to investigate and penalize, pursuant to law, violations of laws or administrative regulations governing the securities markets; and

(8) such other functions as may be so prescribed by laws or administrative regulations.

The securities regulatory authority under the State Council may establish a mechanism for cooperative regulation with the securities regulatory authorities of other countries or regions, to facilitate cross-boarder regulation.

Article 180 When performing its duties pursuant to law, the securities regulatory authority under the State Council shall have the power to adopt the following measures:

(1) to conduct on-the-spot inspection of a securities issuer, listed company, securities company, management company of securities investment funds, securities service institution, stock exchange and securities registrar and clearance institution pursuant to law;

(2) to enter the site where suspected violations of law are committed to conduct investigation and collect evidence;

(3) to inquire the parties concerned, the units and individuals related to the events under investigation and require them to give explanations to the matters related to the events under investigation;

(4) to check and duplicate such materials as property registration and communication records related to the events under investigation;

(5) to check and duplicate the securities transaction records, registration and transfer records, financial and accounting materials of the units and individuals related to the events under investigation and other related documents and materials; to seal up for safekeeping the documents and materials which may be transferred to another place, concealed or destroyed;

(6) to inquire about the accounts of funds and securities and bank accounts of the parties concerned and of the units and individuals related to the events under investigation; where there is evidence to substantiate the fact that the property involved such as illegal funds and securities has been or is liable to be transferred to another place or concealed, or that important evidence has been or is liable to be concealed, forged or destroyed, to freeze or seal up the said accounts with the approval of the chief person in charge of the securities regulatory authority under the State Council; and

(7) when investigating serious violations of the law governing securities, such as manipulation of securities markets and insider trading, with the approval of the chief person in charge of the securities regulatory authority under the State Council, to impose restrictions on the purchasing and selling of the securities by the parties involved in the event under investigation, provided that the period of restriction does not exceed 15 trading days; in complicated cases, such period may be extended for another 15 trading days.

Article 181 When exercising supervision or inspection or conducting investigation in performing the duties of the securities regulatory authority under the State Council pursuant to law, the officials sent for the purpose shall be not less than two persons, and they shall show their lawful identifications and the notifications of supervision, inspection or investigation. Where the officials sent for supervision, inspection or investigation are less than two persons, or such officials fail to show their lawful identifications and the notifications of supervision, inspection or investigation, the unit under inspection or investigation shall have the right to refuse.

Article 182 Staff members of the securities regulatory authority under the State Council must be devoted to their duties, act in accordance with law, and be impartial and honest. They shall not take advantage of their positions to seek illegitimate gains, or disclose the commercial secretes of the relevant units and individuals they get to know.

Article 183 When the securities regulatory authority under the State Council performs its duties pursuant to law, the units and individuals under inspection or investigation shall cooperate, provide truthful documents and materials required, and shall not refuse to cooperate, place obstacles or conceal such documents and materials.

Article 184 The rules and regulations formulated, and the work system for regulation established, by the securities regulatory authority under the State Council pursuant to law shall be made public.

The decisions made by the securities regulatory authority under the State Council, on the basis of the results of its investigations, to punish violations of the law governing securities, shall be made public.

Article 185 The securities regulatory authority under the State Council shall, together with other financial regulatory authorities under the State Council, establish a mechanism for sharing regulatory information.

When the securities regulatory authority under the State Council performs its duties and conducts supervision, inspection or investigation pursuant to law, the departments concerned shall cooperate with it.

Article 186 When in performing its duties pursuant to law, the securities regulatory authority under the State Council discovers that a violation of the law governing securities constitutes a suspected criminal offense, it shall transfer the case to a judicial organ for handling.

Article 187 Staff members of the securities regulatory authority under the State Council shall not hold any positions concurrently in any institutions which are subject to its regulation.

Chapter XI Legal Liability

Article 188 Where an entity, without approval of the statutory authority, publicly issues securities or does so in disguised form, it shall be ordered to cease such issuing and return the funds thus raised, plus the bank deposit interest for the same period, and shall be fined not less than one percent but not more than five percent of the amount of the illegally raised funds; the company incorporated through public issuance of securities without approval or in disguised form shall be banned by the authority or department performing the regulatory duties pursuant to law, in conjunction with the local people’s government at or above county level. The person directly in charge and the other persons directly responsible shall be given a warning and, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Article 189 An issuer that does not meet the conditions for issuance and has not started the issuing of securities although it has obtained approval by fraudulent means shall be fined not less than 300,000 yuan but not more than 600,000 yuan; if it has started such issuing, it shall be fined not less than one percent but not more than five percent of the amount of the illegally raised funds. The person directly in charge and the other persons directly responsible shall be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Where the illegal act mentioned in the preceding paragraph is instigated by a controlling shareholder or a person in practical control of the issuer, punishment shall be meted out pursuant to the provisions of the preceding paragraph.

Article 190 Where a securities company underwrites or purchases and sells as an agent the securities issued to the public without approval, it shall be ordered to cease such underwriting or purchasing and selling, its illegal gains shall be confiscated, and it shall, in addition, be fined not less than one time but not more than five times the illegal gains; if there are no illegal gains or the illegal gains are less than 300,000 yuan, it shall be fined not less than 300,000 yuan but not more than 600,000 yuan; where losses are caused to investors, it shall be held jointly and severally liable for the losses with the issuer. The person directly in charge and the other persons directly responsible shall be given a warning, be disqualified for their posts or for the securities business and, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Article 191 Where a securities company commits one of the following acts in underwriting, it shall be ordered to rectify, be given a warning, its illegal gains shall be confiscated, and it may, in addition, be fined not less than 300,000 yuan but not more than 600,000 yuan; if the circumstances are serious, its business permits in question shall be suspended or revoked; if losses are caused to other securities underwriting institutions or investors, it shall be held liable for the losses pursuant to law; the person directly in charge and the other persons directly responsible shall be given a warning and may, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each; and if the circumstances are serious, they shall be disqualified for their posts or for the securities business:

(1) issuing false advertisements or advertisements that mislead investors, or conducting other promotion activities to the same effect;

(2) soliciting underwriting business through illegitimate competition; and

(3) other acts in violation of the provisions governing securities underwriting business.

Article 192 Where a sponsor produces instruments of sponsorship with false entries, misleading statements or major omissions, or fails to perform its other obligatory duties, it shall be ordered to rectify and be given a warning, its illegal gains shall be confiscated, and it shall, in addition, be fined not less than one time but not more than five times its business earnings; and if the circumstances are serious, its business permits in question shall be suspended or revoked. The person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each; and if the circumstances are serious, they shall be disqualified for their posts or for the securities business.

Article 193 Where an issuer, a listed company or any other entity that is obligated to disclose information fails to disclose information according to the relevant regulations, or there are false entries, misleading statements or major omissions in the information disclosed, it shall be ordered to rectify, be given a warning, and shall, in addition, be fined not less than 300,000 yuan but not more than 600,000 yuan. The person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Where an issuer, a listed company or any other entity that is obligated to disclose information fails to submit relevant reports in accordance with the relevant regulations, or there are false entries, misleading statements or major omissions in the reports submitted, it shall be ordered to rectify, be given a warning, and shall, in addition, be fined not less than 300,000 yuan but not more than 600,000 yuan. The person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Where the illegal act mentioned in the preceding two paragraphs is instigated by a controlling shareholder or a person in practical control of the issuer, listed company or the entity that is obligated to disclose information, the instigator shall be punished in accordance with the provisions of the preceding two paragraphs.

Article 194 Where an issuer or listed company, without approval, diverts the funds raised through public issuance of securities from the purpose set for their use, it shall be ordered to rectify, and the person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Where the illegal act mentioned in the preceding paragraph is instigated by a controlling shareholder or a person in practical control of the issuer or listed company, the instigator shall be given a warning and shall, in addition, be fined not less than 300,000 yuan but not more than 600,000 yuan. The person directly in charge and the other persons directly responsible shall be punished in accordance with the provisions of the preceding paragraph.

Article 195 Where the director, supervisor or senior manger of a listed company, or the shareholder holding 5% or more of the shares of the listed company sells or repurchases the shares of the said company in violation of the provisions of Article 47 of this Law, he shall be given a warning and may, in addition, be fined not less than 30,000 yuan but not more than 100,000 yuan.

Article 196 Where a securities trading site is illegally established, it shall be banned by the people’s government at or above county level, its illegal gains shall be confiscated, and it shall be fined not less than one time but not more than five times the illegal gains; where there are no illegal gains or the illegal gains are less than 100,000 yuan, it shall be fined not less than 100,000 yuan but not more than 500,000 yuan. The person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Article 197 Where a securities company is established without approval, or securities business is conducted illegally, it shall be banned by the securities regulatory authority, its illegal gains shall be confiscated, and it shall be fined not less than one time but not more than five times the illegal gains; if there are no illegal gains or the illegal gains are less than 300,000 yuan, it shall be fined not less than 300,000 yuan but not more than 600,000 yuan. The person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Article 198 Where a company, in violation of the provisions of this Law, engages a person who does not possess the qualifications for a particular post or for securities business, it shall be ordered by the securities regulatory authority to rectify, be given a warning and may, in addition, be fined not less than 100,000 yuan but not more than 300,000 yuan; and the person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Article 199 Where a person who is prohibited by the provisions of laws or administrative regulations from participating in share trading holds or trades in shares directly or under an assumed name or in the name of anther person, he shall be ordered to divest his illegally held shares, his illegal gains shall be confiscated, and he shall be fined not more than the equivalent value of the shares traded in; if the person is a State functionary, he shall, in addition, be given an administrative sanction in accordance with law.

Article 200 Where the employee of a stock exchange, securities company, securities registrar and clearing institution or securities service institution, or a staff member of the securities industry association intentionally provides false materials, conceals, forges, distorts or destroys transaction records, or inveigles investors into purchasing or selling securities, he shall be disqualified for securities business and shall, in addition, be fined not less than 30,000 yuan but not more than 100,000 yuan; if he is a State functionary, he shall, in addition, be given an administrative sanction in accordance with law.

Article 201 Where securities service institutions and their staff members that produce such documents as audit reports, asset valuation reports or legal opinions to support share issuing, listing and trading purchase or sell shares in violation of the provisions of Article 45 of this Law, they shall be ordered to divest their illegally held shares, their illegal gains shall be confiscated, and they shall be fined not more than the equivalent value of the shares traded in.

Article 202 Prior to the publication of the information concerning securities issuance or trading or of other information that may have a considerable effect on the price of certain securities, a person with inside information about securities trading or a person who illegally obtains such inside information purchases or sells the securities in question, divulges such information, or suggests another person purchase or sell such securities, he shall be ordered to divest his illegally held securities according to law, his illegal gains shall be confiscated, and he shall, in addition, be fined not less than one time but not more than five times the illegal gains; if there are no illegal gains or the illegal gains are less than 30,000 yuan, he shall be fined not less than 30,000 yuan but not more than 600,000 yuan. Where a unit engages in insider trading, the person directly in charge and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each. Where a staff member of the securities regulatory authority engages in insider trading, he shall receive a heavier punishment.

Article 203 An entity that, in violation of the provisions of this Law, manipulates the securities markets shall be ordered to divest its illegally held securities, its illegal gains shall be confiscated, and it shall be fined not less than one time but not more than five times the illegal gains; and if there are no illegal gains or the illegal gains are less than 300,000 yuan, it shall be fined not less than 300,000 yuan but not more than 3,000,000 yuan. Where the manipulator is a unit, the person directly in charge of the unit and the other persons directly responsible shall be given a warning and shall, in addition, be fined not less than 100,000 yuan but not more than 600,000 yuan each.