China's CSRC to Crack Down on Non-Compliant Private Fund Managers

ME News reports that on June 5 (UTC+8), a spokesperson for the China Securities Regulatory Commission (CSRC) responded to questions regarding the "Guiding Opinions of the General Office of the State Council on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of Private Investment Funds." Efforts will be made to responsibly manage risks, resolutely eliminate private fund managers that fail to meet regulatory requirements, and adopt multiple measures to prevent other institutions from engaging in illegal or non-compliant activities under the guise of private funds. Information sharing and situation updates will be enhanced to improve risk assessment, refine the division of responsibilities between central and local authorities in resolving private fund risks, strengthen collaboration, and leverage collective efforts to promote standardized development. Private fund managers will be urged to improve internal controls and risk management systems to ensure compliant operations. Industry self-regulation will be strengthened, and the market-based supervisory and constraining role of intermediary service providers will be actively leveraged. A favorable environment will be created to support private equity and venture capital funds in implementing national strategies, while guiding private securities funds to embrace long-term and value-based investment principles. The CSRC places high importance on private fund supervision and has continuously intensified crackdowns on illegal and non-compliant activities. From 2023 to the first quarter of 2026, administrative regulatory measures were taken against 1,805 private fund managers and related parties; administrative penalties were imposed on 97 private fund managers and related parties; and 86 suspected criminal leads were referred to public security organs. The Asset Management Association of China has revoked the registration of 5,444 private fund managers. Enhanced regulation and risk prevention are not ends in themselves, but means to achieve high-quality industry development. Strengthening supervision of private funds helps promptly remove bad actors, prevent the displacement of quality firms by inferior ones, and create a healthy environment for standardized growth. It also encourages private fund managers to fully fulfill their fiduciary duties, protects investors’ legitimate rights and interests, maintains investor confidence, and lays a solid foundation for the long-term, standardized development of the private fund industry. (Jinshi) (Source: ODAILY)