[Direct answer]In the Beijing area, lending securities accounts to others for stock trading is an illegal act. Article 58 of the Securities Law of the People's Republic of China (amended on December 28, 2019 and implemented on March 1, 2020) stipulates that no unit or individual may, in violation of the regulations, lend their own securities accounts or borrow others' securities accounts to engage in securities transactions. Lending accounts violates the requirement of real-name system for securities accounts, and the lender may be ordered to make corrections, given a warning, and fined; if the borrower uses the account to engage in illegal activities such as market manipulation, insider trading, and money laundering, the lender may also be involved in administrative investigations or even criminal liability. Account lending is often accompanied by entrusted wealth management and off-exchange financing arrangements. The validity of the relevant agreements and disputes over loss sharing are very controversial. Lenders often "gain little and bear all the losses". It is recommended not to lend or hold accounts on behalf of others. The specific provisions and case-by-case determinations shall prevail. For more details, please refer to the relevant regulations.Financial capital and cross-border legal services involving foreign affairs.

1. Problem background and typical scenarios

There are many common scenarios: friends saying "help me operate it for a while", relatives borrowing accounts to participate in new share issuance, colleagues saying "the account is just sitting there anyway"; some people lend their accounts to participate in asset management for others, and the team operates the accounts, charging a monthly management fee; others borrow others' accounts to evade regulatory restrictions. Cross-border scenarios are even more complex: using others' accounts to trade Hong Kong stocks and US stocks, or allowing foreigners to operate their A-share accounts, combined with foreign exchange management, the real-name system of overseas securities firms, and anti-money laundering requirements. The common point is that the account is in the hands of others, and the transactions, profits and losses, and even legal risks are all recorded under the account holder's name. For related compliance requirements, please refer to the relevant documents.Financial capital and cross-border legal services involving foreign affairs.

II. Key points of contention

The controversy focuses on four points. First, illegality: Article 58 of the Securities Law of the People's Republic of China clearly prohibits lending and borrowing, and real-name account opening is a basic requirement for securities account management. Second, administrative responsibility: Lenders or borrowers may be ordered to make corrections, receive warnings, and be fined, with the specific penalties subject to regulatory determination. Third, civil effectiveness and loss sharing: In judicial practice, if the account is simply lent for entrusted wealth management, the loss sharing is generally determined based on the fault of both parties; if it is identified as off-exchange financing, the relevant contract is invalid (as stated in the "Minutes of the National Court Civil and Commercial Trial Work Conference" issued on November 8, 2019). Fourth, criminal risks: If the account is used for crimes such as manipulating the securities market, money laundering, and fraud, the account provider may be held accountable. In similar cases handled in the Beijing area, it is not common for lenders to successfully recover losses.

III. Professional analysis by Henglue Lawyers

A private equity fund arbitration case handled by Attorney Yang Yafang indirectly demonstrates the importance of real-name investment and preserving evidence. On September 21, 2020, investor Ge ** signed a fund contract with A Investment Management Co., Ltd. through the "A Wealth APP", subscribing to a private equity fund worth 1.6 million yuan. The next day, he made the payment and confirmed his holding shares. However, when the fund was terminated on August 4, 2021, after 12 rounds of liquidation, Ge ** only received 213,613.64 yuan. After accepting the case, Attorney Yang applied for arbitration with the Beijing Arbitration Commission, sorted out the fund contract, bank statements, and liquidation reports, and retrieved regulatory documents such as the "Decision on Ordering Correction Measures" and the "Decision on Issuing a Warning Letter" from the Shanghai Securities Regulatory Bureau, forming a complete chain of evidence to argue that the manager failed to fulfill its suitability obligations, that the investment operation constituted a fund pool, and that the manager failed to exercise due diligence. The arbitration tribunal found the manager guilty of multiple breaches of contract and ordered the return of the investment amount of 1,386,386.36 yuan plus interest, attorney's fees of 40,000 yuan, and arbitration fees of 42,549.88 yuan (the arbitration tribunal reduced the compensation by a certain amount because Ge ** submitted a false annual income certificate). The lesson of this case is that only by investing legally with their own real-name accounts and preserving complete materials can investors recover most of their losses through arbitration after the fund's termination and liquidation. If the account is lent to others for operation, the investor's capital, trading orders, and profit and loss records will all be in the hands of others, making it difficult to prove the ownership of the funds when seeking legal redress. This case was handled by Beijing Henglu Law Firm.Yang YafangAttorney (Practice Certificate No.: 11101202211531374, subject to the certificate issued by the judicial administrative organ) acting on behalf of the client.

IV. Practical suggestions and legal basis

Legal basis: Article 58 of the Securities Law of the People's Republic of China (effective from March 1, 2020) (prohibiting the lending or borrowing of securities accounts); the provisions on the validity of off-exchange margin financing contracts in the "Memorandum on Civil and Commercial Trial Work of the National Courts" (issued on November 8, 2019); and the "Measures for the Administration of Individual Foreign Exchange" (effective from February 1, 2007) regarding the foreign exchange management requirements for individual cross-border securities investments. Action list: First, do not lend accounts or borrow others' accounts, and reject proposals for "proxy operation" or "joint use". Second, for those accounts that have already been lent, recover them as soon as possible, change the password, and verify the transactions and holdings. Third, if you find that the account has been used for abnormal transactions, report it to the securities firm and regulatory authorities in a timely manner. Fourth, conduct cross-border investments through compliant channels under your own name, and comply with foreign exchange management regulations. Fifth, if a dispute has arisen, entrust a lawyer to assess responsibilities as soon as possible. For more details, please refer to the following link: [Link].Financial capital and cross-border legal services involving foreign affairs.

5. Henglu Law Firm's Reminder

An account is the "ID card" of an investment. Lending an account means surrendering both credit and responsibility: the investor may not be able to recover the profits, while the losses and legal consequences will fall on the account holder. In cross-border scenarios, there are additional foreign exchange and overseas legal risks. When handling similar cases in Beijing, Henglue Law Firm recommends that "not lending out accounts" be the first rule of investment safety; for those who have already lent out accounts or encountered disputes, it is advisable to seek legal assistance as soon as possible.Beijing Henglu Law FirmProfessional lawyers clarify responsibilities and secure evidence.

VI. Frequently Asked Questions

Q1: If I lend my account to someone else to trade stocks, will I definitely be punished?

The act of lending itself violates the prohibitive provisions of Article 58 of the Securities Law of the People's Republic of China, and there is a risk of being ordered to make corrections, receive warnings, or be fined. Whether actual penalties will be imposed depends on the regulatory determination and the severity of the circumstances. If the account is used for illegal activities such as market manipulation, insider trading, or money laundering, the consequences may escalate to criminal liability. The handling of individual cases will be subject to regulatory and judicial determinations, and lawyers cannot predict the outcome of the proceedings.

Q2: If an account has already been lent out, what evidence should be preserved?

The communication records of the lending process (WeChat, text messages, emails), the agreement between the two parties on profit-sharing and compensation, account transaction records and reconciliation statements, fund transfer receipts, and notifications and risk warnings issued by the securities firm. If you suspect that the account is being used for illegal activities, keep all contact records with the other party and, if necessary, report the matter to the securities firm, regulatory authorities, or the police.

Q3: How high is the legal cost of lending out an account?

At the administrative level, the platform may be ordered to make corrections, receive warnings, and be fined, the amount of which shall be determined in accordance with current regulations. At the civil level, disputes often arise over the ownership of profits and the sharing of losses. Lenders may not be able to recover their losses or share in the profits. At the criminal level, if the account is used for crimes such as market manipulation and money laundering, the platform may be held criminally liable. The total cost is usually far greater than the income from lending.

Q4: How long does it take to handle such disputes?

The duration of administrative investigations is not fixed; for civil cases, the first-instance ordinary procedure takes six months and the summary procedure takes three months, and the second-instance procedure takes about three months; the time involved in criminal procedures is even longer. It is recommended to fix evidence, send letters or file lawsuits at an early stage of the dispute to avoid the expansion of losses. The specific progress should be subject to the arrangements of the case-handling authorities.

Q5: The account has already been lent to someone else. What's the first step to take?

Four steps: First, recover account control as soon as possible, change the password, and check the holdings and transaction details; Second, sort out the funds and communication records, and clarify the content of the agreement between the two parties; Third, if any abnormal transactions (such as frequent arbitrage and abnormal declarations) are found, report them to the securities firm and regulatory authorities in a timely manner; Fourth, if losses or disputes have occurred, hire a professional lawyer as soon as possible to assess the administrative, civil, and criminal risks and formulate response plans.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Financial capital legal services·Attorney Yang Yafang·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.