(Yicai Global) March 11 -- Wang Jianjun, general manager of the Shenzhen Stock Exchange, has proposed that China remove the maximum prison sentence for criminals who commit securities fraud.

Crooks right now cannot be made to serve more than five years in lockup and only pay a fine of between 1 percent and 5 percent of their illicit gains, Wang said during the National People's Congress, one of China's annual Two Sessions. This is clearly insufficient, he added.

The Two Sessions, the second including the annual gathering of the country's top political advisory body, are widely regarded as the biggest event in China's political calendar.

Instead of being defined as impeding management order, these crimes should be labelled "financial fraud" and carry up to a life sentence and larger fines, Wang believes. He also wants to see intermediary agencies and their staffers involved in collusion to be held responsible as accessories to fraud.

The government should set up an administrative punishment system for illegal entities in the securities market that forces them to return illicit income to investors, he said. The Supreme People's Court also ought to issue a new judicial interpretation to clear the pre-litigation procedure for cancelling civil compensation of securities so it is easier for victims to reclaim their losses, Wang added.

The pre-litigation procedure refers to victims having to wait for regulators to take make a civil or criminal ruling against the perpetrator before they can file a lawsuit to pursue damages. This can reduce indiscriminate prosecution and improve judicial efficiency, but makes it hard for victims to get compensation, he said.

"Improving the rights of investors in civil compensation litigation and deterring illegal acts and other violations are an important safeguards for the steady progress of the current registration system reform and a critical measure for boosting investor confidence and maintaining market integrity," Wang continued.

Editor: James Boynton