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Haitong Securities: A Shady Deal

History

As the only securities firm with a history of more than 20 years in the Chinese stock market, Haitong Securities has kept a relatively low-key profile. When it was incorporated in 1988, Haitong had a registered capital of CNY 10 million and the Bank of Communications, Shanghai Branch, was the controlling shareholder. Haitong was converted into a company of limited liability in 1994, and later into a corporation in a makeover in 2001. In 2002, Haitong increased its registered capital to CNY 8.734 billion and became the largest multi-business securities firm in terms of capital size in the Chinese mainland securities industry. Haitong acquired the Huanghai Futures Co. and renamed it Haitong Futures Co. Ltd. It also created Fullgoal Fund Management Co. and HFT Investment Management Co. Ltd. After it took over Gansu Securities and Xinan Securities in 2005, Haitong owned 124 business offices and 57 securities service centers.

On June 7, 2007, Haitong Securities went public by way of a reverse takeover of the Dushi Corp. (stock symbol: 600837) on the Shanghai Stock Exchange. (Haitong was the first Chinese mainland securities firm that went public successfully by way of a reverse takeover.) In October 2007, with the approval of the China Securities Regulatory Commission, Haitong made a private placement of no more than 100,000 shares, increased the total share capital by CNY 725 million to 4.114 billion, and optimized its ownership structure by bringing on board the CITIC Group, Ping An, CPIC, and other strategic investors. Haitong now has about CNY 34 billion in net capital and 39 billion in net assets.

In 2008, the Haitong (Hong Kong) Financial Holdings Ltd. obtained official business permissions and licenses. In October of that same year, Haitong Kaiyuan Investment Co. Ltd. was incorporated and engaged in direct equity investment activities. In 2009, Haitong Securities acquired the Taifook Securities Group Ltd. of Hong Kong, establishing a solid platform for overseas development and taking a substantial step toward strategic internationalization. Haitong Securities had a stock and fund trading amount of CNY 4.4937 trillion as an aggregate, ranked fourth in the industry, and held a market share of 4.14 percent. Haitong was also allowed to create 10 subsidiaries and was qualified as a securities broker and a social security fund trustee and custodian (for government-owned and transferred equity). The Shanghai Securities News voted Haitong as Best Securities Broker.

 
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