# China Regulator Names 3 Securities Firms in Cost-Shifting Scandal

> China's regulator names 3 securities firms and 2 fund companies for offshore research cost-shifting.
- Title: China Regulator Names 3 Securities Firms in Cost-Shifting…
- Summary: China's regulator names 3 securities firms and 2 fund companies for offshore research cost-shifting. China's Department of Supervision of Securities and Fund…
- Keywords: china, department of supervision of securities, guolian minsheng securities, hu youwen, kong rong, institutional supervision bulletin, offshore research cost-shifting, securities firms, fund companies, clean practice for securities and future, finance, markets
- Source: BigGo Finance — https://finance.biggo.com/news/e7e8941c-cf5f-4aa9-ae73-a335b7951ce4
- Author: BigGo Finance
- Published: 2026-10-19T06:25:27+00:00
- Read time: 2 min
- Topics: china, department of supervision of securities, guolian minsheng securities, hu youwen, kong rong, institutional supervision bulletin, offshore research cost-shifting, securities firms, fund companies, clean practice for securities and future, finance, markets
## Regulator names 3 securities firms
China's Department of Supervision of Securities and Fund Institutions issued an institutional supervision bulletin on Oct. 16.
## 5 institutions named in scandal
The bulletin involved five institutions, three securities firms and two fund companies, and three responsible individuals were held accountable.
## Guolian Minsheng Securities hit
Guolian Minsheng Securities was hit with a regulatory talk after an executive refused to cooperate with the inspection.
## Hu Youwen and Kong Rong summoned
Vice President and Research Institute General Manager Hu Youwen and Deputy Director Kong Rong were both summoned.
## Cost-shifting violations
When some fund companies joined offshore research trips organized by securities firms' research units, the brokers covered expert consultation fees and research conference tickets.
## Personal travel expenses paid
In some cases securities firms paid round-trip airfare and hotel costs for fund company staff traveling abroad on personal vacations.
## Violates clean practice rules
This directly violated the Provisions on Clean Practice for Securities and Futures Operating Institutions and Their Staff.
## Regulator sets four red lines
The regulator set out clear requirements on costs, process, finance and culture to address the violations.
## Cost rules specific
Research activities must not use trading commissions to shift payment for expert consultation, research intermediaries, conferences, tickets, airfare, accommodation.
## Process requirements
Securities and fund companies must establish systems for research project approval, expense management, retention of research outputs and reporting of anomalies.
## Finance requirements
Securities firms must improve financial management systems, strictly implement pre-approval mechanisms for research and conference hosting.
## Cultural requirements
The cultural requirements cover all domestic and overseas travel and research occasions, explicitly prohibiting participation in activities that violate public order and good morals.
## Key takeaway

China's Department of Supervision of Securities and Fund Institutions named three securities firms and two fund companies for offshore research cost-shifting violations.