news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Data is a treasure

Data treasure

Less worries about stock trading

Recently, the China Securities Regulatory Commission issued a penalty notice. In May 2020, the stock price of *ST Jinzhou was lower than the par value for many consecutive days. In order to alleviate the risk of delisting of the company, Zhu, the then chairman of *ST Jinzhou, arranged to announce the information of major asset restructuring. At the same time, he raised funds to provide private equity and traded "*ST Jinzhou" through 21 accounts, affecting the stock price.

After calculation, the account group made a profit of 48.09 million yuan. The CSRC determined that this was market manipulation and fined it 192 million yuan.

The then chairman used the restructuring announcement to boost the stock price

In April 2020, *ST Jinzhou announced that the company's liquidity was tight and that its corporate bonds had substantially defaulted. The 2019 performance report showed a huge loss, and the audit report also showed that there were major uncertainties that might cause major doubts about the company's ability to continue operations. Affected by this, since May, *ST Jinzhou's stock price has continued to fall, and the closing price was lower than the stock par value for 8 consecutive trading days from May 14 to 25.

On the evening of May 25, 2020, *ST Jinzhou issued a "Reminder Announcement on the Signing of a Letter of Intent for Equity Acquisition of Major Asset Restructuring", stating that the company intends to use no more than 500 million yuan of its own cash (including self-raised funds) to acquire 100% of the equity of Yousheng Tengfei, the holding platform of Yousheng Education. The counterparty promised that the target company will achieve net profits of 20 million yuan, 70 million yuan, 100 million yuan, 140 million yuan and 170 million yuan from 2020 to 2024, respectively.

After investigation, it was found that in April 2020, Chen, the actual controller of Yousheng Education, sought financing from Fenghui Leasing Co., Ltd. (hereinafter referred to as Fenghui Leasing), a subsidiary of *ST Jinzhou. Relevant personnel of Fenghui Leasing conducted due diligence on the financial status of Yousheng Education and introduced the company to Zhu. Zhu arranged for the listed company to announce the major asset reorganization information of the proposed acquisition of Yousheng Tengfei on the evening of May 25, 2020, knowing that Yousheng Education was in financial difficulties, its net assets had been negative in the past three years, and *ST Jinzhou had no ability to pay for equity acquisitions, and instructed the shareholders of Yousheng Tengfei to modify the report data to adjust the net assets in 2019 to a positive number.

After the announcement, Zhu did not arrange for an intermediary agency to conduct due diligence, but instead contacted a company that provided public relations consulting services to the company to push the incident to the media and guide public opinion in the stock forum, in order to induce investors to buy.

After the above announcement was released, *ST Jinzhou’s stock price hit the daily limit for eight consecutive days and reached the par value on June 4.

On the evening of October 26, 2020, *ST Jinzhou issued an announcement to terminate the above-mentioned major asset reorganization.

Raising funds to manipulate stock prices

In May 2020, Zhu borrowed RMB 100 million from Fenghui Leasing by pledging the equity of Guangming Group Co., Ltd. held by Beijing Lvbai Weiye Technology Development Co., Ltd. and Beijing Huahong Growth Investment Consulting Co., Ltd., and signing a personal unlimited liability guarantee. In July 2020, Zhu borrowed another RMB 30 million by mortgaging the Qingdao property he controlled.

The above funds were all transferred to a bank account actually controlled by Zhao, the actual controller of the private equity Kangaroo Fund. Zhao then allocated the raised funds and securities accounts to the trading team of Wang, the general manager of the Kangaroo Fund, for use.

Zhao and Wang controlled and used multiple accounts to influence the stock price of "*ST Jinzhou".

From May 26, 2020 to December 18, 2020 (hereinafter referred to as the manipulation period), Zhao and Wang controlled and used 21 accounts to influence the trading price of "*ST Jinzhou" by concentrating their capital advantages and shareholding advantages to continuously buy and sell, and trading between accounts under their actual control. During the period, the account group bought a total of 1.081 billion shares of "*ST Jinzhou" and sold 754 million shares. After calculation, the account group made a profit of 48.09 million yuan.

The above facts are sufficiently proven by relevant announcements, securities account information, bank account information, relevant personnel interrogation records, situation explanations, electronic equipment forensic information, exchange-related data and other evidence.

The CSRC believes that the above-mentioned actions of Zhu, Zhao and Wang violate the provisions of Article 55, paragraph 1, items 1, 3 and 5 of the Securities Law, and constitute manipulation of the securities market as described in Article 192 of the Securities Law.

Arguing that it has the nature of market value management

Some parties argued that this case was an investment behavior in the secondary market, which was of the nature of market value management and should not be considered as market manipulation. Moreover, there were only 21 securities accounts involved in the case, and the funds involved were only about 100 million yuan. Compared with other market manipulation cases punished recently, the circumstances were not serious. The notice was obviously too heavy on the "three penalties for one" for the party who traded "*ST Jinzhou" for "maintaining market value" in this case.

The CSRC said that there was no impropriety in the amount of punishment and the proportion of responsibility shared by the parties in this case.

First, the party's defense of "maintaining market value" to avoid delisting is not a legal and legitimate reason for exemption, nor does it constitute a mitigating circumstance. In fact, Zhu, as the chairman and actual controller of a listed company, deliberately released false information to mislead investors in order to enable the company he controlled to avoid delisting due to trading indicators, and raised funds to jointly manipulate his company's stocks with secondary market traders, which seriously deviated from the "three fairness" principles and hindered the order of securities trading. The CSRC comprehensively considered the nature, circumstances, and degree of social harm of the illegal acts in this case, and there was nothing wrong with confiscating the illegal gains and imposing a three-fold fine on the party.

Second, in this case, Zhu played a major role in the joint manipulation and should bear the main responsibility. Zhao was responsible for raising securities accounts and allocating funds, and handed the accounts to Wang's team for operation. Wang, as the executor of the transaction decision, made specific transactions according to Zhao's requirements. Zhao and Wang should bear secondary responsibility for the joint manipulation of illegal acts. When determining the proportion of responsibility of each party, the CSRC has comprehensively considered their status, role, and subjective and objective circumstances in the joint violation, and there is no improper handling.

According to the facts, nature, circumstances and degree of social harm of the parties' illegal acts, and in accordance with Article 192 of the Securities Law, the CSRC decided: for Zhu, Zhao and Wang's manipulation of the price of "*ST Jinzhou", they were ordered to deal with illegally held securities in accordance with the law and to confiscate a total of 48.09 million yuan of illegal gains, of which Zhu shall bear 28.85 million yuan, Zhao shall bear 14.43 million yuan and Wang shall bear 4.81 million yuan; they were fined 144 million yuan, of which Zhu shall bear 86.56 million yuan, Zhao shall bear 43.28 million yuan and Wang shall bear 14.43 million yuan.

Source: China Securities

Statement: All information content of Databao does not constitute investment advice. The stock market is risky and investment should be cautious.

Editor: Xie Yilan

Proofreading: Li Lingfeng

Data treasure