On February 22, the China Securities Regulatory Commission issued six administrative penalties involving insider trading, market manipulation and other illegal activities.
Specifically, five people were punished for insider trading in Hengyi Petrochemical Co., Ltd. (hereinafter referred to as "Hengyi Petrochemical"). Among them, Lu Changshui and Zhang Weiyang were fined 25.95 million yuan by the China Securities Regulatory Commission. Six people were fined for market manipulation. Zhang Shunping was fined the most for using a securities account group to manipulate 11 stocks. The China Securities Regulatory Commission ordered Zhang Shunping to deal with the illegally held securities in accordance with the law and fined him 83.4 million yuan.
Teng Biyan, director of the Office of the Punishment Committee of the China Securities Regulatory Commission, said at a press conference recently that the China Securities Regulatory Commission focuses on key cases such as information disclosure violations, severely punishes violations, adheres to the "zero tolerance" crackdown, and effectively makes administrative law enforcement "thorny". In the next step, the China Securities Regulatory Commission will continue to maintain the main tone of "strict" administrative law enforcement, strictly pursue legal responsibilities for illegal activities, strictly standardize and precise law enforcement for market manipulation, insider trading and other behaviors, and help maintain fair trading order.
Three insider trading cases
All involve Hengyi Petrochemical
Three of the six fines were insider trading cases, all related to Hengyi Petrochemical.
Back in 2017, in March of that year, Zhejiang Hengyi Group Co., Ltd. (hereinafter referred to as "Hengyi Group") set up a merger and acquisition fund to acquire the assets of bankrupt enterprises in the chemical fiber industry through project companies. Hengyi Petrochemical has successively signed an "Entrusted Management Agreement" with the project company, stipulating that Hengyi Petrochemical will provide management and consulting services for the project company's production and operation activities. Within 18 months from the signing of the agreement, if the project company meets the conditions for acquisition by a listed company, Hengyi Petrochemical will have the right of first refusal.
Subsequently, the acquisition continued to advance. Guosen Securities proposed a plan for Hengyi Group to acquire 100% of the equity of the project companies Hangzhou Yijing and Jiaxing Yipeng, and then Hengyi Petrochemical would issue shares to Hengyi Group to purchase assets and raise supporting funds, and successively formed mergers and acquisitions and restructuring projects The team stationed at the site to carry out initial project due diligence and form and report a feasible project plan. Hengyi Group entrusted Ruihua Institute, Zoomlion Asset Appraisal to Shuangtu New Materials to conduct audits and evaluations, and continued to conduct audits and evaluations for Jiaxing Yipeng and Taicang Yifeng.
Until April 3, 2018, Hengyi Petrochemical announced the "General Risk Warning and Trading Resumption Announcement on the Issuance of Shares to Purchase Assets" and the "Plan for the Issuance of Shares to Purchase Assets and Raise Supporting Funds and Related Transactions (Revised Draft)". The company's stocks have resumed trading since the market opened on April 3, 2018.
The China Securities Regulatory Commission determined that the issuance of shares by Hengyi Petrochemical to purchase 100% of the equity of Jiaxing Yipeng, 100% of the equity of Taicang Yifeng and 100% of the equity of Shuangtu New Materials, as well as supporting fund raising and related transactions, constituted inside information. The inside information was formed no later than early October 2017 (i.e. no later than October 10, 2017) and was made public on April 3, 2018.
According to the investigation by the China Securities Regulatory Commission, Huang Mouchen is the deputy general manager of the Zhejiang Branch of China Cinda Asset Management Co., Ltd. (hereinafter referred to as "Cinda Asset"). Cinda Asset Zhejiang Branch and Hengyi Group negotiated the establishment of a merger and acquisition fund to integrate the upstream and downstream industries of the chemical fiber industry. The project was led by Huang Mouchen. Huang Mouchen and others were aware of the information that Hengyi Group repurchased 100% of the equity of Taicang Yifeng and injected it into Hengyi Petrochemical. They were insiders of the information and knew the information no later than November 2017. During the sensitive period of the inside information, Chen Jianping had a phone call with Huang Mouchen, an insider of the inside information, on December 27, 2017. Chen Jianping borrowed 80 million yuan and controlled the use of six securities accounts (hereinafter referred to as the "account group") including "Chen Jianping" for insider trading in Hengyi Petrochemical. In the end, he made no profit but lost money. The account group's loss amounted to 18,571,725 yuan. The China Securities Regulatory Commission decided to impose a fine of 600,000 yuan on Chen Jianping.
The inside information in the other two tickets was also related to phone calls. According to the investigation by the China Securities Regulatory Commission, Lu Changshui and Qiu Moulin are related. Lu Changshui worked for Hengyi Group in the early days. The office of the company founded by Lu Changshui is in the same office building as Hengyi Petrochemical. During the sensitive period of the inside information, Lu Changshui had phone calls with insiders of the inside information, Qiu Moulin, Ni Moufeng, and Shen Moqiang. Lu Changshui had many phone calls with Qiu Moulin on December 14 and 24, 2017; Lu Changshui and Ni Moufeng had many phone calls with each other on December 8, 10, 21, and 28, 2017; Lu Changshui and Shen Mouqiang had multiple phone calls with each other on December 1, 11, and 20, 2017.
Lu Changshui and Zhang Weiyang are classmates in the CEO class of Cheung Kong Graduate School of Business and have many contacts. At the end of 2017, Lu Changshui, Zhang Weiyang and others met at a class reunion and discussed Hengyi Petrochemical. The China Securities Regulatory Commission determined that Lu Changshui and Zhang Weiyang jointly committed insider trading in Hengyi Petrochemical, and that the "Zhang Weiyang" securities account was operated by Lu Changshui on Zhang Weiyang's behalf. The two parties did not sign a written agreement, but only agreed verbally that if they made money, they would share some of it with Lu Changshui, and their economic interests were related. Zhang Weiyang sometimes logs in to his account through the website to take a look. The securities account of "Zhang Weiyang" purchased a total of 5,050,050 shares of Hengyi Petrochemical on December 19, December 22, December 27, December 28, and December 29, 2017. After calculation, the amount of illegal gains from Hengyi Petrochemical by Lu Changshui and Zhang Weiyang from insider trading was 12,975,052 yuan. The China Securities Regulatory Commission decided to confiscate the illegal income of Lu Changshui and Zhang Weiyang of 12,975,052 yuan, and impose a fine of 12,975,052 yuan on Lu Changshui and Zhang Weiyang.
Miao Linghong and Shao Linping are husband and wife. They live together and form a community of interests. During the sensitive period of the inside information, Shao Linping had multiple phone calls with Qi Mou'er, the insider of the inside information, on December 25, 2017. Shao Linping asked Miao Linghong to pay attention to and trade Hengyi Petrochemical. After calculation, Miao Linghong controlled the use of two securities accounts, "Miao Linghong" and "Weng Mouna", and the amount of illegal income was 279,537 yuan. The China Securities Regulatory Commission finally decided to confiscate the illegal income of Miao Linghong and Shao Linping of 279,537 yuan, and imposed a fine of 279,537 yuan on Miao Linghong and Shao Linping.
Use account groups to manipulate 11 stocks
More than 80 million yuan was fined and confiscated
The CSRC also announced three cases of market manipulation. Among them, Zhang Shunping was punished the most for using a securities account group to manipulate 11 stocks. The China Securities Regulatory Commission ordered Zhang Shunping to deal with illegally held securities in accordance with the law and fined him 83.4 million yuan.
The China Securities Regulatory Commission found out that from June 26 to September 29, 2017, Zhang Shunping controlled and used 27 securities accounts to influence the trading prices and trading volumes of seven stocks including Vignas, Jin Qilin, Kanglonda, Tieliu Stock, Red Dragonfly, Sun and Moon Stock, and Peacebird by concentrating capital advantages, continuous trading, and false declarations. ; From March 6 to April 27, 2018, Zhang Shunping controlled and used 39 securities accounts. By concentrating his capital advantages and shareholding advantages, he continued to buy and sell securities, conduct securities transactions, false declarations and other means among the accounts he actually controlled, affecting the transaction prices and trading volumes of 4 stocks, including Qin'an Shares, Shanghai Yahong, Hengrun Shares, and Zhongma Transmission. To sum up, from June 26, 2017 to April 27, 2018, Zhang Shunping controlled and used the account group to manipulate 11 stocks including Vignas, making a total profit of 20,850,067 yuan.
The China Securities Regulatory Commission determined that the above-mentioned behavior constituted manipulation of the securities market, and finally decided to "penalty three for every violation" and confiscated Zhang Shunping's illegal income of 20,850,067 yuan and imposed a fine of 62,550,203 yuan.
In another market manipulation case, the China Securities Regulatory Commission found that Tan Cunling, Chen Bin, and Shan Kai had manipulated the stock price of Beijing Leadman Biochemical Co., Ltd. (hereinafter referred to as "Leadman").
Specifically, according to the existing evidence of the China Securities Regulatory Commission, Tan Cunling controlled 33 securities accounts including "Tan Cunling", Chen Bin controlled the use of 3 securities accounts including "Dai Moufeng", and Shan Kai controlled the use of 3 securities accounts including "Yan Mouliang", taking advantage of capital advantages and holdings. During the manipulation period, Leadman's stock price rose by 37.38%, while the GEM Composite Index fell by 15.45%. During the manipulation period, it deviated from the corresponding sector's Composite Index by 52.83%. After calculation, Lidman lost a total of 38,222,159 yuan in transactions in the above 39 accounts.
Tan Cunling and Chen Bin have a close relationship and had frequent WeChat and phone calls during the operation. At the same time, Chen Bin had close phone calls with Shan Kai, and others accused Shan Kai of trading Leadman in accordance with Chen Bin's instructions. The China Securities Regulatory Commission believed that the above-mentioned transactions constituted manipulation of the securities market and decided to impose a fine of 1.2 million yuan on Tan Cunling; a fine of 1.2 million yuan on Chen Bin; and a fine of 600,000 yuan on Shan Kai.
Two people manipulated 113 securities accounts
No profit but loss
Wang Yingyan, then chairman of Meishang Ecological Landscape Co., Ltd. (hereinafter referred to as "Meishang Ecology"), received a fine of 13 million yuan for manipulating his own stock, Meishang Ecology.
According to investigations by the China Securities Regulatory Commission, from June 12, 2018 to July 3, 2020, Wang Yingyan and Ji Yun actually controlled 113 securities accounts including "Wu", concentrated their capital advantages and shareholding advantages, continuously traded in Meishang Ecology, and manipulated Meishang Ecology. During the manipulation period, the price of Meishang Ecology deviated from the relevant index many times. For example, from June 12, 2018 to March 21, 2019, the Meishang Ecological stage increased by 34.60%, deviating from the GEM Composite Index (down 0.97%) by 35.57% during the same period. The account group bought a total of 3140873757 shares and sold 3138440957 shares. After deducting commissions and related taxes, the account group suffered a total loss of 237996091 yuan.
The China Securities Regulatory Commission believes that the above-mentioned behavior constitutes manipulation of the securities market. Wang Yingyan and Ji Yun collaborated and cooperated with each other in the process of manipulating the Meishang ecosystem, and are joint illegal entities. Among them, Wang Yingyan was the initiator and decision-maker of the manipulation. She arranged the trading margin and was responsible for the borrowing of some accounts. She played a leading role and should bear the main responsibility. Ji Yun was the perpetrator of the manipulation and was responsible for the borrowing of some accounts. He should bear secondary responsibility. It was decided to impose a fine of 8 million yuan on Wang Yingyan and Ji Yun, of which Wang Yingyan was fined 5 million yuan and Ji Yun was fined 3 million yuan.
