China will increase penalties for fraudulent issuance of securities and other capital market violations from next year, Bloomberg reports.
The National People's Congress Standing Committee passed an amendment to criminal laws, which will take effect March 1.
Imprisonment for fraudulent securities issuances was raised to 15 years from five years. For fraudulent disclosures, the maximum sentence was raised to 10 years from the current three with an upper limit of $30,572 fine removed, according to a statement by China Securities Regulatory Commission.
The commission said over the past few years of rapid development in capital markets, some financial fraud cases resulted in small fines. However, they "severely harmed the market order."
For fraud in securities issuance and significant transactions, lawyers and accountants will face a maximum of 10 years' imprisonment. The amendments also aim to strengthen penalties against controlling shareholders and intermediaries such as sponsors in securities issuances.
In April China securities regulators cracked down on financial fraud cases by investigating 22 domestically listed companies and handed out administrative penalties in 18 cases.
China Securities Investor Service Centre started to crack down on corporate malfeasance under the new class-action mechanism starting from this July. The center can sue on behalf of all individual investors in a company.
Retail investors said the new litigation process "made it cheaper and easier to sue listed companies.