The Supreme People's Procuratorate's Department for Economic Crime has issued a guideline on handling financial fraud cases, outlining key issues including the determination of facts and legal application in such cases.
The guideline, consisting of 15 articles across four sections, makes clear the overall requirements for handling financial fraud cases, the criteria for establishing the offense of fraudulent securities issuance, and the standards for filing and prosecuting cases. It also addresses issues such as illegal disclosure or non-disclosure of crucial information, and clarifies the criteria for criminal implication of intermediary organizations and their personnel.
Adopting a zero-tolerance approach, the guideline instructs the prosecution of all relevant parties involved in fraudulent securities issuance, illegal disclosure or non-disclosure of critical information within listed companies, their controlling shareholders, actual controllers, directors, supervisors, senior management. Those targeted also include intermediary organizations providing false documentation to facilitate financial fraud, and other individuals and entities aiding listed companies in committing financial fraud.
The guideline stresses the importance of accurately understanding and applying the standards for filing and prosecuting cases. There is no specific order for applying multiple criteria, and all relevant criteria must be applied after thorough investigation. The determination of "direct economic losses" may refer to civil judgments or reports from specialized institutions for calculation. Detailed standards and methods are provided in the guideline for calculating the inflated or deflated assets, operating revenue, and profits, as well as the percentages of these figures in disclosed totals involved in significant matters that fail to be disclosed as required.
The guideline specifies that criminal liability should be pursued according to the law for companies and enterprises engaging in improper cross-period confirmations in their accounts, falsifying financial data followed by false balancing, or engaging in continual non-disclosure of crucial information against rules.
In cases involving multiple levels and numerous personnel within companies or enterprises, a tiered and classified approach will be maintained, according to the guideline. Additionally, individuals and organizations intentionally providing false documentation or displaying gross negligence in their duties will face criminal liability as prescribed by law.
