Article 204 Where an entity, in violation of the provisions of this Law, purchases or sells securities within the restricted period of their assignment, it shall be ordered to rectify, be given a warning and shall, in addition, be fined not more than the equivalent value of the securities illegally purchased or sold. 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 205 Where a securities company, in violation of the provisions of this Law, provides funds or securities to finance their clients to trade in securities, its illegal gains shall be confiscated, its business permits in question shall be suspended or revoked, and it shall be fined not more than the equivalent value of the illegally provided funds or securities. The person directly in charge and the other persons directly responsible shall be given a warning, be disqualified for the posts or for the securities business, and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Article 206 Where a unit or individual that, in violation of the provisions of the first or the third paragraph of Article 78 of this Law, disrupts the securities markets, it/he shall be ordered to rectify, the illegal gains shall be confiscated, and it /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, it/he shall be fined not less than 30,000 yuan but not more than 200,000 yuan.

Article 207 Where a unit or individual that, in violation of the provisions of the second paragraph of Article 78 of this Law, makes false statements or gives misleading information in the course of securities trading, it/he shall be ordered to rectify and be fined not less than 30,000 yuan but not more than 200,000 yuan; if the offender is a State functionary, he shall, in addition, be given an administrative sanction in accordance with law.

Article 208 Where a legal person opens an account in another person’s name or makes use of another person’s account to trade in securities, it shall be ordered to rectify, its illegal gains shall be confiscated, and it shall, in addition, be fined not less than one time but not more than fives times the illegal gains; if there are no illegal gains or the illegal gains are less than 30,000 yuan, it shall be fined not less than 30,000 yuan but not more than 300,000 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 100,000 yuan each.

Where a securities company provides its own or another person’s securities trading account for the illegal acts mentioned in the preceding paragraph, in addition to the punishments specified in the preceding paragraph, the person directly in charge and the other person directly responsible shall be disqualified for the posts or for the securities business.

Article 209 Where a securities company, in violation of the provisions of this Law, conducts securities proprietary account transactions by using another person’s name or in the name of a natural person, it shall be ordered to rectify, 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, in addition, be fined not less than 300,000 yuan but not more than 600,000 yuan; and if the circumstances are serious, its permit for securities proprietary account transaction shall be suspended or revoked. The person directly in charge and the other persons directly responsible shall be given a warning, they shall be disqualified for the posts or for securities business, and shall, in addition, be fined not less than 30,000 yuan but not more than 100,000 yuan each.

Article 210 Where a securities company trades in securities or processes transactions at variance with the entrustment of a client or handles matters other than transactions against the client’s expression of his true intention, it shall be ordered to rectify and shall be fined not less than 10,000 yuan but not more than 100,000 yuan. If it causes losses to the client, it shall be held liable for the losses in accordance with law.

Article 211 Where a securities company or a securities registrar and clearing institution misappropriate its clients’ funds or securities, or trades in securities for its clients without their entrustments, it shall be ordered to rectify, 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 100,000 yuan, it shall be fined not less than 100,000 yuan but not more than 600,000 yuan; and if the circumstances are serious, it shall be ordered to close down, or its business permits in question shall be revoked. The person directly in charge and the other persons directly responsible shall be given a warning, they shall be disqualified for the posts or for securities business, and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan each.

Article 212 Where a securities company that conducts brokerage business accepts the entrustment of discretionary power of a client to trade in securities, or undertakes to secure gains or make up losses to a client in securities trading, it shall be ordered to rectify, its illegal gains shall be confiscated, and it shall, in addition, be fined not less than 50,000 yuan but not more than 200,000 yuan, and its business permits in question may 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 than100,000 yuan each, and they may be disqualified for the posts or for securities business. Article 213 Where an acquirer fails to discharge its obligations of announcing its acquisition of a listed company, tendering an acquisition offer, submitting a report on its acquisition of the listed company, etc., as is required by the provisions of this Law, or amends the tendered acquisition offer without approval, it shall be ordered to rectify, be given a warning, and shall, in addition, be fined not less than 100,000 yuan but not more than 300,000 yuan; pending rectification, the acquirer shall not exercise the right to vote otherwise vested through the shares acquired by itself or jointly with another entity through agreement or other arrangements. 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 214 Where an acquirer or its controlling shareholder, by making use of the acquisition of a listed company, impairs the lawful rights and interests of the company acquired and its shareholders, it shall be ordered to rectify and be given a warning; if the circumstances are serious, it shall, in addition, be fined not less than 100,000 yuan but not more than 600,000 yuan. Where losses are caused to the company acquired and its shareholders, it shall be held liable for the losses. 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 215 Where a securities company or its employee, in violation of the provisions of this Law, accepts a client’s entrustment in private to trade in securities, it/he shall be ordered to rectify and be given a warning, the illegal gains shall be confiscated, and it/he 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 100,000 yuan, it/he shall be fined not less than 100,000 yuan but not more than 300, 000 yuan.

Article 216 Where a securities company, without approval, engages in the trading of non-listed securities, it shall be ordered to rectify, the illegal gains shall be confiscated, and it shall be fined not less than one time but not more than five times the illegal gains.

Article 217 Where a securities company, without justifiable reasons, fails to commence business three months after its incorporation, or ceases business for three consecutive months or longer after the commencement of business, its corporate business license shall be revoked by the company registration authority.

Article 218 Where a securities company, in violation of the provisions of this Law, establishes, acquires or closes a branch office, or merges with another company, divides, suspends business, dissolves or goes bankrupt, or establishes or acquires a securities business institution abroad or becomes a shareholder of such an institution, it shall be ordered to rectify, 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 100,000 yuan, it shall be fined not less than 100,000 yuan but not more than 600,000 yuan. The person directly in charge shall be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 100,000 yuan.

Where a securities company, in violation of the provisions of Article 129 of this Law, alters the relevant matters, it shall be ordered to rectify and shall, in addition, be fined not less than 100,000 yuan but not more than 300,000 yuan. The person directly in charge shall be given a warning and shall, in addition, be fined not more than 50,000 yuan.

Article 219 Where a securities company operates securities business beyond the licensed business scope, it shall be ordered to rectify, 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; and if the circumstances are serious, it shall be ordered to close down. The person directly in charge and the other persons directly responsible shall be given a warning, they shall be disqualified for the posts or for securities business, and shall, in addition, be fined not less than 30,000 yuan but not more than 100,000 yuan each.

Article 220 Where a securities company fails to separate its securities brokerage, underwriting, proprietary account transaction and securities asset management from each other, as is required by law, but mixes them up in operation, it shall be ordered to rectify, its illegal gains shall be confiscated, and it shall, 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 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 100,000 yuan each; and if the circumstances are serious, they shall be disqualified for the posts or for the securities business.

Article 221 Where an entity obtains a securities business permit by submitting false certificates or by such other fraudulent means as concealing important facts, or a securities company commits a serious illegal act in the course of securities trading, thus it ceases to possess the qualifications for the business, its business permit shall be revoked by the securities regulatory authority.

Article 222 Where a securities company or its shareholder or a person in practical control, in violation of the relevant provisions, refuses to submit or provide information and materials of business management to the securities regulatory authority, or submits or provides such information and materials with false entries, misleading statements or major omissions, it shall be ordered to rectify, be given a warning and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan, and its securities business permits in question may 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 more than 30,000 yuan, and they may be disqualified for the posts or the securities business.

Where a securities company provides finance or guaranty for its shareholder or a person connected with the shareholder, it shall be ordered to rectify, be given a warning and shall, in addition, be fined not less than 100,000 yuan but not more than 300,000 yuan. The person directly in charge and the other persons directly responsible shall be fined not less than 30,000 yuan but not more than 100,000 yuan each. If the shareholder is at fault, pending its rectification as required, the securities regulatory authority under the State Council may restrict his shareholder rights; and if he refuses to rectify, the said authority may order him to divest the shares he holds of the securities company.

Article 223 Where a securities service institution fails to perform its duties diligently so that there are false entries, misleading materials or major omissions in the documents it prepares and produces, it shall be ordered to rectify, its business revenues in question shall be confiscated, its business permit for securities service business shall be suspended or revoked, and it shall, in addition, be fined not less than one time but not more than five times the business revenues in question. The person directly in charge and the other persons directly responsible shall be given a warning, they shall be disqualified for the securities business, and shall, in addition, be fined not less than 30,000 yuan but not more than 100,000 yuan each.

Article 224 Where an entity issues or underwrites corporate bonds in violation of the provisions of this Law, it shall be punished in accordance with the relevant provision of this Law by the department authorized by the State Council.

Article 225 Where a listed company, securities company, stock exchange, securities registrar and clearing institution or securities service institution fails to preserve the relevant documents and materials in accordance with the relevant provisions, it shall be ordered to rectify, be given a warning, and shall, in addition, be fined not less than 30,000 yuan but not more than 300,000 yuan; and if it conceals, forges, distorts or destroys relevant documents and materials, it shall be given a warning and shall, in addition, be fined not less than 300,000 yuan but not more than 600,000 yuan.

Article 226 Where a securities registrar and clearing institution is established without approval of the securities regulatory authority under the State Council, it shall be banned by the securities regulatory authority, 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.

Where an investment consultancy institution, financial advisory institution, credit appraisal institution, asset valuation institution or accounting office engages in securities service business without approval, it shall be ordered to rectify, 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.

Where a securities registrar and clearing institution or securities service institution violates the provisions of this Law or the business rules formulated according to law, the securities regulatory authority shall ordered it to rectify, confiscates its illegal gains and, in addition, impose on it a fine of 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 100,000 yuan, the said authority shall impose on it a fine of not less than 100,000 yuan but not more than 300,000 yuan; and if the circumstances are serious, the authority shall order it to close down, or revoke its securities service business permit.

Article 227 Where the securities regulatory authority under the State Council or the department authorized by the State Council commits one of the following acts, the person directly in charge and the other persons directly responsible shall be given administrative sanctions according to law:

(1) giving approval to an application for securities issuance, establishment of securities company, etc. that is not in conformity with the provisions of this Law;

(2) in violation of the relevant provisions, adopting the measures specified in Article 180 of this Law such as conducting on-the-spot inspection, investigation for collecting evidence, making inquires, freezing funds or securities, and sealing up documents and materials for safekeeping;

(3) imposing administrative penalties on relevant institutions and persons in violation of provisions; and

(4) other acts committed when failing to perform its duties in accordance with law.

Article 228 Where the staff member of a securities regulatory authority or the member of an issuance examination commission fails to perform his duties as provided for by this Law, or abuses his power, or neglects his duty, or seeks illegitimate gains by taking advantage of his position, or discloses the commercial secrets of a unit or individual which he comes to know, he shall be investigated for his legal liabilities in accordance with law.

Article 229 Where a stock exchange, after examination, grants an application for listing securities that does not meet the conditions specified by this Law, it shall be given a warning, its business revenues shall be confiscated, and it shall, in addition, be fined not less than one time but not more than five times the business revenues. 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 230 Where an entity, without resorting to violence or threat, refuses to let the securities regulatory authority and its staff members exercise the powers of supervision, inspection and investigation according to law, or prevent them from doing so, it shall be given an administrative penalty for public security according to law.

Article 231 Where a violation of the provisions of this Law constitutes a crime, criminal responsibility shall be investigated for according to law.

Article 232 Where, for violation of the provisions of this Law, an entity is held liable for civil compensation and is required to pay a fine or penalty, but the enforceable property is not sufficient to satisfy both simultaneously, it shall bear the civil compensation first. Article 233 Where an entity violates laws, administrative regulations or the relevant regulations of the securities regulatory authority under the State Council, if the circumstances are serious, the securities regulatory authority under the State Council may impose the measure of denying the persons held responsible access to securities markets.

Denying access to the securities markets, mentioned in the preceding paragraph, is a system under which a person is barred from engaging in the securities business or serving as a director, supervisor or senior manager of a listed company for a certain period of time or permanently.

Article 234 The fines collected and the illegal gains confiscated according to this Law shall all go to the State treasury.

Article 235 Where a party is not satisfied with the decision on punishment made by the securities regulatory authority or the department authorized by the Stated Council, it may apply for an administrative reconsideration or bring a lawsuit directly in a people’s court according to law.

Chapter XII Supplementary Provisions

Article 236 Securities the listing and trading of which on stock exchanges have been approved according to administrative regulations before this Law goes into effect shall continue to be traded according to law.

Securities business institutions which have been established upon approval pursuant to administrative regulations and regulations of the finance department under the State Council before this Law goes into effect and which do not fully conform to the provisions of this Law shall, within the specified time limit, work to meet the requirements provided for by this Law. The specific measures in this regard shall be formulated separately by the State Council.

Article 237 To apply for approval for public issuance of shares or corporate bonds, the issuer shall pay examination fees in accordance with relevant rules.

Article 238 Direct or indirect issuance of securities abroad by domestic enterprises, or listing and trading of securities abroad by such enterprises, shall be subject to approval given by the securities regulatory authority under the State Council in accordance with the regulations of the State Council.

Article 239 The specific measures for the shares of domestic companies subscribed and traded in foreign currencies shall be formulated separately by the State Council.

Article 240 This Law shall go into effect as of January 1, 2006.

The English translation is for reference only and if there is any discrepancy, the Chinese version shall prevail.