Reading Financial Reports: Compliance Outlook for Public Mutual Funds in 2025: Over 25 Institutions Receive Regulatory Notices, Internal Controls and Investment Operations Become Focus Points

In 2025, China's mutual fund industry, under the backdrop of stringent regulation with 'sharp teeth' and a push for high-quality development, experienced a year of strong oversight and strict accountability. Since the China Securities Regulatory Commission (CSRC) released the 'Action Plan to Promote High-Quality Development of Mutual Funds' in May of that year, regulatory authorities have continued to strengthen enforcement efforts, maintaining a high-pressure stance against various violations.

According to incomplete statistics from Xinhua Finance and Bread Finance Research, in 2025, more than 25 mutual fund managers were penalized by local branches of the CSRC, the China Securities Association, and other regulatory bodies for various violations, including some leading firms in the industry. The reasons for these violations mainly involved compliance and internal controls, investment operations, fund sales, information disclosure, and corporate governance.

Bosera Funds and China Merchants Fund received regulatory notices due to compliance and internal control issues.

Research shows that compliance and internal controls are one of the main reasons mutual fund managers face penalties for violations.

According to disclosed announcements, Bosera Funds was subject to administrative regulatory measures by the Shenzhen Regulatory Bureau of the CSRC on October 31, 2025, due to compliance and internal control issues. The company was ordered to make corrections and suspend certain operations. Meanwhile, two senior executives of Bosera Funds were also issued warning letters due to compliance and internal control issues.

Bosera Funds has taken measures such as improving systems, optimizing processes, and strengthening supervision, fully completing the rectification work, and has passed the rectification inspection.

Figure 1: Bosera Fund Ordered to Make Rectifications and Have Certain Business Activities Suspended Due to Compliance and Internal Control Issues

In 2025, China Merchants Fund was also penalized due to compliance and internal control issues. Announcements showed that on October 27, 2025, the Shenzhen Regulatory Bureau of the CSRC took administrative regulatory measures against China Merchants Fund due to compliance and internal control issues, requiring the company to make corrections. Senior executives of China Merchants Fund were summoned for regulatory discussions due to compliance and internal control issues.

Figure 2: China Merchants Fund Ordered to Make Rectifications Due to Compliance and Internal Control Issues

Apart from Bosera Funds and China Merchants Fund, institutions such as Great Wall Fund and Nanhua Fund were also penalized by regulators in 2025 due to compliance and internal control issues.

HFT Fund, First State Credit Fund, and others are involved in matters related to investment operations.

Investment operations are also one of the significant reasons for regulatory penalties against public offering funds.

The announcement shows that HFT Fund was issued a warning letter by the Shanghai Regulatory Bureau of the China Securities Regulatory Commission on August 19, 2025, due to issues with investment operations. The penalty was based on the 'Management Measures for Private Asset Management Business of Securities and Futures Operating Institutions.'

Figure 3: Haitong Fund Receives a Warning Letter Due to Investment Operation Issues

First State Credit Fund, on the other hand, was ordered to rectify and suspend new private asset management product registrations for three months by the Shenzhen Regulatory Bureau of the China Securities Regulatory Commission on October 31, 2025, due to issues with investment operations and other problems (such as incomplete or improperly executed internal control systems in sales management). Some senior executives of the company were also issued warning letters.

In addition to HFT Fund and First State Credit Fund, institutions such as Hua An Fund were also penalized by regulators in 2025 due to investment operation issues.

HSBC Jintrust Fund, Zhongke Wotu Fund, and others were penalized for reasons such as information disclosure.

Other types of violations also include information disclosure, corporate governance, and fund sales.

On December 16, 2025, HSBC Jintrust Fund was subject to administrative regulatory measures and issued a warning letter by the Shanghai Regulatory Bureau of the China Securities Regulatory Commission due to information disclosure issues.

Figure 4: HSBC Jinxin Fund Fined for Disclosure Violations

Zhongke Wotu Fund was subject to administrative regulatory measures by the Guangdong Regulatory Bureau of the China Securities Regulatory Commission in August 2025 due to other issues (financial indicators) and was ordered to make corrections.

Overall, the penalties for violations in the mutual fund industry in 2025 demonstrated a broad coverage, multiple types of penalties, and involved several leading institutions. Under the trend of strengthened regular supervision, comprehensively enhancing compliance management and internal control effectiveness, while strictly adhering to the bottom line of investor protection, has become an essential path for achieving sustainable and high-quality development in the mutual fund industry.

[Reading Financial Reports] is a column co-produced by Xinhua Finance and Bread财经 that focuses on interpreting listed company financial reports. Xinhua Finance is the national financial information platform constructed by Xinhua News Agency, providing authoritative, professional, and comprehensive financial information services covering global stock, foreign exchange, and bond markets.

(Article Serial Number: 2044663125139132416/CJT)

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