Xu Jiayin Photo:VCG

China's top securities regulator, the China Securities Regulatory Commission, has imposed a lifetime ban on Hui Ka Yan, also known as Xu Jiayin, the founder of real estate developer China Evergrande Group, from the securities market and fined him 47 million yuan ($6.53 million) for involvement in serious financial fraud, according to a filing by Evergrande Real Estate Group on Monday night.

The heavy penalty comes as part of China's efforts to regulate the capital market with stricter oversight and shows the country's commitment to ensuring stability in the financial sector, experts said.

Hui was engaged in deciding and organizing financial fraud with particularly malicious means that have had severe consequences, according to the CSRC.

Former vice chairman of China Evergrande Group, Xia Haijun, was fined 15 million yuan and given a lifetime ban from the securities market. Evergrande Real Estate was fined 4.175 billion yuan ($580 million) and ordered to make corrections.

The CSRC has identified three areas where Hui, Evergrande Real Estate and other senior executives are suspected of engaging in illegal activities.

These include inflating income in Evergrande Real Estate's annual reports for 2019 and 2020 which amounted to 564 billion yuan.

The public issuance of corporate bonds by Evergrande Real Estate in 2020 and 2021 is also suspected to have involved fraudulent activities through the use of false data.

Additionally, Evergrande Real Estate failed to timely disclose relevant information, such as not submitting annual reports for 2021 and 2022, not disclosing major litigation and arbitration cases, and not disclosing the failure to repay maturing debts.

Evergrande Real Estate stated that the company will continue to monitor the progress of these issues. In addition, it waived its right to make statements, enter a defense or hold hearings regarding this penalty.

The penalties imposed on Hui Ka Yan and Xia Haijun - including the lifetime entry bans - represent a significant punishment for professional managers and specialists. Further legal actions are expected to be taken against Hui, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Monday.

"This serves as a stern warning to anyone daring to test the law, engage in speculative tricks, or commit fraud for profit," Dong said.

Hui was put under mandatory measures in September.

The action taken against Hui exemplifies the enforcement of stringent regulatory measures as the CSRC is ramping up efforts to impose stricter regulation, Dong said.

The CSRC issued on Friday four policy documents to enhance supervision and management of the capital market and prevent risks, vowing to promote the high-quality development of the stock market.

Among the four documents, three are guidelines meant to boost supervision of IPOs, listed companies, brokers and public offering funds. The last one aims to enhance self-construction of the CSRC system.

The regulatory measures demonstrate China's determination to protect investors with "teeth and horns" and boost market confidence, as well as cultivate a good environment for the healthy and stable development of the capital market, analysts said.