To further implement the spirit of Circular on Issues Concerning the Strict Strike on Illegal Stock Issuance and Illegal Securities Business Operation issued by the General Office of State Council (Guo Ban Fa No. [2006] 99, hereinafter referred to as Guo Ban Document No.99), the 2^nd work conference of the coordination group for correcting the illegal securities activities was held in Beijing recently. The meeting summarized the works for striking the illegal securities activities in the first half of the year, analyzed the overall situations of the works for striking the illegal securities activities, and launched research and deployment for the further strike of the illegal securities activities.

According to the meeting, ever since the first work conference of the coordination group for correcting the illegal securities activities, the coordination group members have paid high attention and made proper arrangement to carry out the works deployed at the first work conference. The local governments have taken active actions to provide close cooperation and handle many important cases. The works for striking the illegal securities activities in the first half of 2007 have obtained outstanding achievements: first, the members have enhanced the coordination, guidance, and supervision on the works for striking the illegal securities activities, and solved the relevant problems in the administrative law enforcement and judicial judgment. Second, the CSRC has held securities regulatory system’s work conference to deploy the works of the securities regulatory system for striking illegal securities activities. Third, the local governments have strictly implemented the Guo Ban Document No. 99 and established corresponding leading system and work system. Up till now, 26 provincial and city governments have established leading group or work group for striking illegal securities activities together with the public security departments, procuratorial departments, courts, industrial &commercial authorities, financial authorities, banking regulatory commissions, securities regulatory commissions, National Development and Reform Commission, State-owned Assets Supervision and Administration Commission of the State Council and the Department of Propaganda, and specified the work procedures and responsibility division of the departments in the precaution, discovery, nature acknowledgement, case handling, responsibility investigation and afterwards handling, thus providing system guarantee for driving the strike on the illegal securities activities. Fourth, monthly report system is established for reporting the information on the works for striking the illegal securities activities. Since the beginning of this year, the CSRC has established an information collection, summary and analysis system for the illegal securities activities in the whole regulatory system to conduct monthly statistics and monthly report. Fifth, propaganda works have been actively carried out. Sixth, active research is made to include the non-listed public companies into regulation.

Through the efforts of the relevant parties, the spreading trend of the illegal securities activities has been preliminarily suppressed. However, we should be clear that the illegal securities activities have not been completely eliminated, and some local governments have not fully understood the severity and harm of the illegal securities activities. They have not taken proper measures and are not active in carrying out regulation works. There exists pressure in maintaining the stability of the market in some key areas. Therefore, emphasis shall be laid on the following works in the second half of the year: First, continue to urge the local governments that have not issued implementation rules for Guo Ban Document No. 99 to issue implementation rules. Second, strive to maintain the social stability. Third, the members shall further make research and coordination for the legal problems occurring in the judicial practice. They shall reach understanding for some obvious problems, so as to better guide the judicial practice. Fourth, pay close attention and promptly respond to the new trend of the illegal securities activities. The illegal securities activities have the new trend of disseminating information through network and media, which are more covert and cheating. The securities regulatory commissions, public security departments, industrial &commercial authorities and network administration departments shall have close cooperation and enhance the supervision force to prevent such illegal activities from appearing in new form. Fifth, continue to have comprehensive cooperation with the news media, and select representative case for propaganda to further expand the propaganda influence. Sixth, make better research on the non-listed public companies and prepare for the construction of multi-layer capital market. Enhance the normalized administration on the intermediate agencies by combining the strike on the illegal securities activities.

The convener of the work conference, vice chairman of CSRC, Mr. Gui Minjie attended the meeting and proposed specific requirements for implementing the meeting spirit. According to Mr. Gui, by organizing effective law enforcement activities and propaganda, the spreading trend of the illegal securities activities have been preliminarily suppressed. However, with the development and change of the market, the illegal securities activities may have resurgence, and there still exist difficult tasks for striking the illegal securities activities. The governments and the relevant departments shall continue to enhance the strike on the illegal securities activities and strengthen the propaganda, so as to protect the legal rights of the investors and prepare for the successful holding of the 17^th national congress. Chairman assistant of CSRC Mr. Yao Gang presided over the meeting. Representatives from Supreme People"s Procuratorate, Ministry of Public Security, People’s Bank of China, State Administration of Industry and Commerce, China Banking Regulatory Commission also attended the meeting and made a report on the progress of their works for striking the illegal securities activities in the first half of the year.

The China Securities Regulatory Commission

(This English version by Shenzhen Securities Information Co., Ltd. is for your reference only. In case any discrepancy exists between the Chinese and English context, the Chinese version shall prevail.)