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Another "rat-catching" case: The Shanghai Securities Regulatory Bureau recently punished Zhang, a fund manager of a Shanghai fund management company, for trading using undisclosed information.

Zhang was born in the 1980s and lives in Jing'an District, Shanghai. According to the investigation, Zhang's illegal behavior occurred between October 31, 2018 and August 5, 2022. The penalty decision shows that Zhang was fined one for one, and his illegal gains of 15.6626 million yuan were confiscated, and he was fined the same amount, and was banned from the market for 10 years.

According to the relevant information disclosed in the announcement, Zhang's information overlaps with Zhang Liang, the former fund manager of Huaan Fund. In July 2022, Huaan Quality Selection was reported to be "forced to stop selling" due to personal problems of fund manager Zhang Liang. On August 5, Zhang Liang resigned from all products for "personal reasons" and would no longer transfer to other positions in the company. There was no further news afterwards.

It is rare for a proposed fund manager to have his fund sales suspended due to personal reasons while the product is still in the fundraising period. Moreover, when Zhang Liang resigned, he still had two new funds that had been established for less than half a year.

China Business News has sought confirmation from Huaan Fund, but as of press time, no valid information has been received.

"Husband and wife team" insider trading

The penalty results show that Zhang has served as the fund manager of A Securities Investment Fund (hereinafter referred to as "A Fund") managed by a Shanghai Fund Management Co., Ltd. since October 31, 2018. On August 5, 2022, Zhang resigned as the fund manager of A Fund and resigned from the company.

According to the investigation, from October 31, 2018 to August 5, 2022, Zhang was aware of non-public information such as investment decisions, transaction targets, and transaction times related to Fund A due to his position. During his tenure, Zhang directed his spouse Liu to operate the securities account of "Yan" to place orders for transactions.

In the past four years, "Yan Mou"'s GF Securities account purchased a total of 656 stocks in the Shanghai and Shenzhen stock markets, and purchased 393 stocks in a similar manner with Fund A, accounting for 59.91% of the number of stocks purchased in a similar manner. The amount of similar purchases was 666 million yuan, accounting for 59.80% of the amount, and the account's profit from similar purchases was 15.6626 million yuan.

The Shanghai Securities Regulatory Bureau believes that Zhang, as a fund manager, used undisclosed information to trade for a long time, with a large amount of illegal income, and the illegal circumstances were relatively serious. It decided to order Zhang to correct his behavior, confiscate the illegal income of 15.6626 million yuan, and impose a fine of 15.6626 million yuan.

In addition, Zhang was banned from the market for 10 years. During the ban period, he is not allowed to continue to engage in securities business or securities service business in the original institution or serve as a director, supervisor or senior manager of the original securities issuer, nor is he allowed to engage in securities business or securities service business in any other institution or serve as a director, supervisor or senior manager of other securities issuers.

Who is Zhang?

As soon as the punishment was announced, people in the industry speculated who this fund manager born in the 1980s in Shanghai was. Multiple pieces of information showed that Zhang was similar to Zhang Liang, a fund manager who suddenly resigned from Huaan Fund.

Public information shows that Zhang Liang began to manage Huaan state-owned enterprise reform on October 31, 2018 and left on August 5, 2022.

As early as July 2022, rumors spread in the industry that "Hua'an Fund Manager Zhang Liang is unable to continue serving as the manager of Hua'an Quality Selection Fund due to personal reasons, sales of relevant new funds have been suspended, and customers who have placed orders in the past two days are prompted to cancel their orders." Subsequently, Hua'an Quality Selection ended fundraising ahead of schedule and hired additional fund managers.

According to the announcement in August, Zhang Liang resigned from all products for "personal reasons" and would not transfer to other positions in the company. This means that he officially left Huaan Fund. Wind data shows that before leaving, his total assets under management reached 7.518 billion yuan.

At that time, the market had many speculations and doubts about the "personal reasons" for Zhang Liang's resignation. A person from a medium-sized or large fund company told China Business News that if the fund manager involved resigned during the fundraising period, it was usually due to force majeure. "Generally, before launching a new fund, the company will talk to the fund manager and will not arrange management or launch new products for fund managers who intend to resign," the person said.

In terms of performance, Wind data shows that Huaan State-owned Enterprise Reform A, which Zhang Liang managed for the longest time, had a return of 231.82%. Huaan Value Driven One-Year Holding and Huaan Quality Leading were established in February and March of that year respectively, and were in operation for less than half a year.

However, regarding whether Zhang is Zhang Liang, the reporter from the First Financial Daily asked Huaan Fund for confirmation, but no valid information was obtained as of press time.

In the eyes of industry insiders, "rat trading" involves corruption, professional ethics and other issues in the industry. In the high-risk, high-return financial industry, practitioners, especially fund managers, are not allowed to use their positions to seek personal gain. Not only does it damage the interests of fund assets and fund unit holders, it also undermines the "fairness, justice and openness" principles of the securities market and the normal trading order of the fund industry.