Regulatory crackdown on investment advisors: Two firms receive penalties on the same day

Securities Times Reporter Hu Feijun

At the start of the new year, regulatory oversight of securities investment advisory firms remains strict.

Recently, multiple administrative regulatory decisions disclosed by the Guangdong Securities Regulatory Bureau show that two licensed advisory firms—Huiyan Zhituo Technology Co., Ltd. Guangzhou Branch (referred to as “Huiyan Zhituo Guangzhou Branch”) and Guangdong Bozhong Intelligent Technology Investment Co., Ltd. (referred to as “Bozhong Zhituo”)—were both subjected to regulatory measures due to exposure of multiple compliance and risk control violations.

Huiyan Zhituo Guangzhou Branch was found to have five major issues, including incomplete records of advisory services and illegal stock recommendations during online live broadcasts, and was ordered to conduct internal compliance checks every month for the next six months. Bozhong Zhituo was penalized for employees “using accounts” to broadcast videos containing promised returns and other content, and two involved employees received warning letters.

Huiyan Zhituo Receives Another Fine

On February 25, the Guangdong Securities Regulatory Bureau announced that, upon investigation, Huiyan Zhituo Guangzhou Branch committed five violations in its securities advisory business: first, incomplete records of advisory services and compliance management; second, some advisors made definitive market trend judgments and specific stock investment suggestions during online broadcasts without displaying their names or registration numbers; third, employees not registered as securities investment advisors with the China Securities Association provided investment advice to clients; fourth, inadequate suitability management, failing to carefully assess clients’ financial situations and risk tolerance; fifth, service commitments did not match actual practices.

Based on this, the Guangdong Securities Regulatory Bureau ordered Huiyan Zhituo Guangzhou Branch to conduct monthly compliance inspections over six months, thoroughly reviewing system establishment, operational compliance, and rectification efforts. Additionally, Wang Mouyu, the head of Huiyan Zhituo Guangzhou Branch, was issued a warning letter for managerial negligence.

Data shows Huiyan Zhituo is an established advisory firm founded in 1995, licensed to operate securities and futures business since 1998.

Despite its long licensing history, the company has repeatedly crossed regulatory lines. On January 16, this year, the Shanxi Securities Regulatory Bureau issued five fines to Huiyan Zhituo, citing seven violations including misleading advertising, and ordered corrective actions and a three-month suspension of onboarding new clients. Several senior executives at the time were also required to undergo regulatory interviews.

In 2025, Huiyan Zhituo frequently appeared on penalty lists, with branches in Wuhan, Guangzhou, Shaanxi, and others being ordered to rectify violations. In December 2024, the company was fined 1.8 million yuan by the Shanxi Securities Regulatory Bureau for exaggerated marketing claims like “buy casually, earn casually.”

Bozhong Zhituo Employees “Using Accounts” to Spread Violations

Similarly, another Guangdong-based advisory firm, Bozhong Zhituo, also received a regulatory penalty on the same day due to internal compliance and risk control shortcomings.

The Guangdong Securities Regulatory Bureau found that between January 20 and January 28, 2026, some employees at Bozhong Zhituo used other employees’ internet accounts without following internal compliance review procedures to broadcast videos containing illegal content related to securities investment advice. The company failed to effectively monitor or stop such behavior, revealing deficiencies in compliance management and risk control mechanisms, and inadequate oversight of employee conduct.

Specifically, employee Wang Congcong used colleague Xia Yong’s internet account without internal approval to publicly broadcast videos with specific investment suggestions, some lacking reasonable basis and even promising returns illegally. Xia Yong, the account owner, also failed to exercise prudent management. The Guangdong Securities Regulatory Bureau ordered the company to correct these issues within 30 days and issued warning letters to Wang Congcong and Xia Yong.

High Complaint Rates Pose Industry Development Concerns

Active trading in the A-share market has created opportunities and growth for securities advisory firms, but compliance issues and business irregularities are also emerging concerns.

On February 24, the Shanghai Securities Industry Association released a report on the 2025 self-regulation inspection of investment consulting firms in Shanghai, highlighting problems in internal control, investor suitability management, client complaint handling, marketing, employee conduct, and office management.

The association noted that in 2025, the overall revenue and client base of Shanghai’s securities investment consulting firms grew significantly, indicating sustained market demand and resilience in business development. For example, leading firm Jiufang Zhituo is expected to generate about 3.43 billion yuan in revenue in 2025, up 48.74% year-on-year; net profit attributable to the parent company is projected between 900 million and 930 million yuan, an increase of over 230%.

However, despite rapid growth, high complaint rates remain a concern. The association pointed out that complaints continue at high levels, exposing gaps in business regulation, service transparency, and client suitability management. Moving forward, the industry should improve service quality, reduce complaints, optimize product offerings, and promote healthy, sustainable development of securities investment advisory services.