Another securities firm executive faces consumption restrictions.
Recently, public information from Tianyancha shows that Hongta Securities Co.,Ltd. has been subject to enforcement measures by Beijing Financial Court, involving an amount of 102 million yuan. Due to this enforcement case, both Hongta Securities and its legal representative Shen Chunhui have been restricted from high consumption.
According to Hongta Securities' semi-annual report, the dispute originated from a bond pledged repo transaction between an asset management product of Hongta Securities and a Shanghai-based private fund institution. The bond involved is the notorious "Huachen bond" that attracted significant attention years ago due to its default.
The arbitration results show that the securities firm's asset management product must repay principal plus interest, supplementary interest, and penalty interest totaling 96.2211 million yuan. In early July this year, the private fund institution applied to the court for enforcement. On August 1, Beijing Financial Court deducted 37.9321 million yuan from the asset management product's custody account.
**Hongta Securities Faces Consumption Restrictions**
According to the consumption restriction order disclosed by Tianyancha, on July 1, Beijing Financial Court accepted the enforcement case filed by Shanghai Tongxiao Investment Development Center (Limited Partnership) against Hongta Securities regarding domestic non-foreign arbitration award enforcement. The enforcement amount reaches 102 million yuan.
Since Hongta Securities failed to fulfill the payment obligations determined by the effective legal document within the period specified in the enforcement notice, Beijing Financial Court imposed consumption restriction measures on Hongta Securities in accordance with relevant regulations including the Civil Procedure Law and Supreme People's Court provisions on restricting high consumption by judgment debtors. The company and its legal representative are prohibited from high consumption and non-essential consumption behaviors for daily life and work.
Public information shows that Hongta Securities' legal representative is company President Shen Chunhui, who is subject to consumption restrictions. The restriction measures take effect from the date the consumption restriction order is issued and will be lifted after Hongta Securities fulfills the obligations determined by the effective legal document.
**Involving "Huachen Bond" Default**
Public information indicates the dispute is related to "Huachen bonds." Since the bond's default in 2020, its impact on financial institutions' business continues to ferment.
According to Hongta Securities' annual report, during August 14-17, 2020, an asset management product managed by Hongta Securities - Hongxin No.2 Single Asset Management Plan ("Hongxin No.2") - conducted bond pledged repo transactions with Tongxiao Changce No.1 Private Securities Investment Fund ("Tongxiao No.1") managed by Shanghai Tongxiao Investment. The total borrowing principal was 59.985 million yuan, with Hongxin No.2 pledging "19 Huachen 04" bonds to Tongxiao No.1 as collateral.
In August 2020, due to a reduction in the conversion rate of Hongxin No.2's pledged bonds, Hongta Securities supplemented 29.5 million yuan in cash to the Hongxin No.2 account at the custodian's request to avoid shortfall in pledged bonds. The following month, Hongta Securities withdrew 10 million yuan from the Hongxin No.2 account.
Soon after, Huachen Group's bond default attracted market attention. In late October 2020, a 1 billion yuan private bond issued by Huachen Group only paid interest upon maturity, failing to repay principal, raising questions about debt evasion. In November that year, the CSRC conducted special inspections regarding Huachen Group's bond default. The same month, Shenyang Intermediate People's Court accepted the bankruptcy application against Huachen Group, initiating bankruptcy reorganization proceedings.
During the execution phase of Huachen Group's reorganization plan, its bankruptcy administrator paid bond settlement amounts of 36.4726 million yuan to Hongta Securities' asset management product - Hongxin No.2 - according to the reorganization plan, with an expected additional payment of 17.3179 million yuan.
Shanghai Tongxiao Investment argued that Hongxin No.2's failure to repay borrowed funds from Tongxiao No.1 constituted default, and that Hongta Securities' unauthorized withdrawal of Hongxin No.2 funds without liquidation violated Shanghai Tongxiao Investment's rights. Based on this, Shanghai Tongxiao Investment applied for arbitration with Shanghai International Economic and Trade Arbitration Commission.
The case was heard on February 11, 2025, with arbitration results announced on April 14:
Hongxin No.2 must repay principal plus interest, supplementary interest, and penalty interest totaling 96.2211 million yuan to Tongxiao No.1;
Tongxiao No.1 has priority rights over amounts Hongxin No.2 has already received from Huachen Group regarding "19 Huachen 04" bonds and maintains priority rights over future settlements;
Arbitration fees of 737,000 yuan should be fully borne by Hongxin No.2. Since Shanghai Tongxiao Investment has prepaid the full arbitration fees, Hongxin No.2 should pay these costs to Shanghai Tongxiao Investment.
Hongta Securities stated the arbitration results have no significant adverse impact on the company. On July 7 this year, Hongta Securities received an enforcement notice from Beijing Financial Court after Shanghai Tongxiao Investment applied for enforcement, with the court accepting the case on July 1. On August 1, Beijing Financial Court deducted 37.9321 million yuan from Hongxin No.2 Asset Management Plan's custody account.