China regulator punishes Sealand Securities for 'chaotic' management

SHANGHAI (Reuters) - China's securities regulator said on Friday it would suspend the launch of Sealand Securities new asset management products for a year and halt other operations after a probe into its business found its internal management "chaotic". "The probe found that Sealand Securities has problems including chaotic internal management, ineffective compliance and risk management, and many cases of misbehaviours," the China Securities Regulatory Commission (CSRC) said in a statement posted on its microblog. The regulator added it would suspend Sealand Securities' new account openings and bond underwriting businesses for a year. The penalties mark the latest move by regulators to clean up the financial sector, with a focus on shadow banking and excessive borrowings that fuel speculation in risky investments. Sealand Securities' executives could not be reached for comment after Reuters put in several calls to the brokerage late on Friday. CSRC's probe into Sealand Securities' bond trading and asset management business came in the wake of a scandal last December that triggered a rout in China's bond market. The scandal involved "forged" bond agreements which the CSRC said involved deals worth about 20 billion yuan (£2.2 billion) and 20 financial institutions. In a separate statement, CSRC said it punished Sinvo Fund Management Co after a probe found the mutual fund house had lax risk control and management, resulting in defaults in a bond-related investment scheme last December. Calls to Sinvo were not answered. (Reporting by Samuel Shen and John Ruwitch; Editing by Jacqueline Wong)