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Securities practitioners were fined for illegal stock trading!

Recently, the China Securities Regulatory Commission has issued several fines, including two cases involving illegal stock speculation by securities practitioners. As a securities practitioner, Sun violated regulations in buying and selling securities and privately accepted clients' commissions to speculate in stocks, and was fined about 6 million yuan by the China Securities Regulatory Commission. He also "voluntarily confessed his illegal behavior," "voluntarily resigned," and "disposed of stocks at a low price," and requested a lighter punishment, but was rejected by the China Securities Regulatory Commission.

In another case, Yu, as a securities practitioner, privately accepted clients' commissions to buy and sell securities and was fined 300,000 yuan by the CSRC.

Resigned voluntarily in the hope of reducing the punishment

A recent penalty notice issued by the China Securities Regulatory Commission shows that, in accordance with the relevant provisions of the Securities Law, the China Securities Regulatory Commission has filed a case, conducted a trial and hearing on Sun's illegal securities trading and privately accepted clients' commissions to trade securities as a securities practitioner. The investigation and trial have now ended.

It has been found that from April 23, 2020 to April 28, 2023, Sun worked in the Suzhou branch of a leading securities firm in East China.

During the period of the case, Sun accepted Han Mouying's commission privately to operate "Han Mouying's" securities account to place orders and trade, with a transaction amount of nearly 60 million yuan. During the period of the case, the funds in "Han Mouying's" securities account came from Han Mouying, and Sun was not found to have received any profit share or remuneration.

In addition to privately accepting clients' commissions to buy and sell securities, as a securities practitioner, Sun also bought and sold securities in violation of regulations.

During the period involved in the case, Sun transferred approximately 1.4 million yuan to his father-in-law's securities account and used the securities account to buy and sell stocks, with a transaction amount of 428 million yuan and a profit of approximately 2.9 million yuan.

The CSRC believes that Sun's behavior as a securities company employee who privately accepted clients' commissions to buy and sell stocks violated the second paragraph of Article 136 of the Securities Law, and constituted an illegal act of securities company employees privately accepting clients' commissions to buy and sell securities. Sun's behavior as a securities company employee who borrowed other people's securities accounts to buy and sell stocks violated the first paragraph of Article 40 of the Securities Law, and constituted an illegal act of securities company employees borrowing other people's names to buy and sell stocks or other securities with equity nature.

The party concerned argued that he should be given a lighter or reduced punishment because he had "voluntarily confessed to illegal acts", "voluntarily resigned" and "disposed of stocks at a low price" and other circumstances that actively mitigated the harmful consequences of illegal acts. Sun took the initiative to confess to the CSRC that he had used other equipment to operate his father-in-law's securities account and his wife's securities account. The CSRC had not previously been aware of the relevant illegal acts, so Sun constituted the situation of "voluntarily confessing illegal acts that the administrative authority had not yet known".

The CSRC stated that Sun's confession that he used other devices to operate his father-in-law and wife's securities accounts was not accepted, and it did not constitute "active confession of illegal behavior." "Voluntary resignation" and "low-price disposal of stocks" did not constitute "active mitigation of the harmful consequences of illegal behavior," and the CSRC's penalty was not improper.

Taking into account the facts, nature, circumstances and degree of social harm of the parties' illegal acts, the CSRC decided: For Sun's behavior of privately accepting clients' commissions to buy and sell securities, in accordance with Article 210 of the Securities Law, Sun was ordered to correct his behavior, given a warning and fined 100,000 yuan; for Sun's employees' illegal buying and selling of securities, in accordance with Article 187 of the Securities Law, approximately 2.9 million yuan was confiscated from Sun and a fine of 2.9 million yuan was imposed.

Privately accepting clients' entrustment to trade stocks

The CSRC also recently announced another case of a practitioner violating regulations in stock trading.

In accordance with the relevant provisions of the Securities Law, the China Securities Regulatory Commission has initiated an investigation into the behavior of a securities practitioner who privately accepted clients' commissions to buy and sell securities. The investigation and handling of this case has now been completed.

From January 2019 to April 2023, Yu worked in the Shanghai Zhongshan South Road Branch and Nanjing Branch of a small and medium-sized brokerage firm in the western region as a client manager and person in charge. He is a securities practitioner.

In 2019, Wang Moujun opened a securities account named "Liu Mouying" at the Nanjing branch of Kaiyuan Securities, where Yu Mou worked, through an introduction, in order to seek a brokerage firm with bargaining power and low commissions. The trading funds mainly came from Wang Moujun's family. The main trading hardware for the "Liu Mouying" securities account was a laptop used by Yu Mou. From April 2022 to January 2023, Yu Mou accepted Wang Moujun's entrustment to trade stocks on his behalf. The "Liu Mouying" securities account entrusted 709 orders involving 121 securities. Yu Mou accepted Wang Moujun's entrustment to buy and sell securities, but did not actually obtain any profit share or remuneration.

The CSRC believes that Yu’s above-mentioned behavior violates the provisions of Article 136, paragraph 2 of the Securities Law, and constitutes a situation as described in Article 210 of the Securities Law where securities practitioners privately accept clients’ commissions to buy and sell securities.

Based on the facts, nature, circumstances and degree of social harm of the parties' illegal acts, and in accordance with the provisions of Articles 191 and 210 of the Securities Law, the CSRC decided to order a securities practitioner to correct his or her behavior of privately accepting commissions from clients to buy and sell securities, give him or her a warning, and impose a fine of RMB 300,000.