On December 19 the China Securities Regulatory Commission ("CSRC") published the Implementing Measures for the Administrative Settlement Pilot Program (Draft for Comment) (the "Draft") to seek public comments by January 19, 2015.
The Draft is composed of five chapters, including the general provisions, the scope and conditions of application of administrative settlement, procedures for implementing administrative settlement, management and use of administrative settlement funds and supplementary provisions.
The Draft states that an administrative settlement is a process whereby the CSRC, in the investigation of possible violations of securities and futures laws, administrative regulations and the relevant regulatory rules committed by a citizen, legal person or an organization (the concerned person), pursuant to a request of the concerned person, negotiates with the concerned person in respect of the correction of violations, elimination of the negative consequences of violations and payment of administrative settlement funds to compensate investors, and reaches a settlement agreement, and accordingly terminates the investigation process. The Draft strictly defines the conditions for application of an administrative settlement.