(Yicai Global) March 11 -- China’s securities regulator has handed Cornerstone Asset Management, which once sought to become the first Chinese private equity fund manager to go public, a fine of CNY1.1 million (USD169,600) for irregularities in asset disclosure and transfers, as well as deceptive promises.

The Guangdong provincial branch of the China Securities Regulatory Commission also warned He Xu, general manager of Cornerstone Asset, which also trades under the English name Cornerstone Capital, and fined him CNY360,000 (USD55,500), the CSRC said in an administrative penalty decision posted on its website on March 8.

From May 2018 to January 2020, the Guangzhou-based firm inked Qualified Domestic Institutional Investor asset management plans and swap agreements with brokerages and public fund managers to invest in Chinese firms listed in the US. But it had inflated as much as USD1.8 billion (USD278 million) in assets. Moreover, it had embezzled nearly CNY600 million (USD92.3 million) in funds, according to the CSRC.

Between March 2017 and December 2019, Cornerstone misappropriated CNY564 million and HKD276.7 million (USD35.7 million) in assets under four fund products by transferring the money to other parties, including its staff. The firm also signed deals with investors to guarantee a minimum return on 12 fund products, the CSRC added.

Set up in 2015, Cornerstone filed with the US Securities and Exchange Commission in June 2018 for an initial public offering, aiming to list on the Nasdaq Stock Market. The firm focuses on value investment in emerging global fields, covering technology, media, telecoms, biomedicine, energy conservation, and environmental protection, according to its website.

He owns 37.5 percent of Cornerstone, which has registered capital of CNY10 million (USD1.54 million), according to the website of the Asset Management Association of China.

Editor: Emmi Laine, Xiao Yi