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on august 28, the economic investigation bureau of the ministry of public security released today the typical cases of cracking down on manipulation crimes and purifying the stock market ecology (part 3), which specifically disclosed two cases: the case of guan mouwei and others manipulating the securities market in chaoyang, liaoning, and the case of zheng mousheng and others manipulating the securities market in fushun, liaoning.

i. basic facts of the case

liaoning chaoyang guan mouwei and others manipulated the securities market case

in august 2020, the liaoning public security bureau filed a case against guan mouwei and others for suspected manipulation of the securities market. the investigation found that from september to november 2019, guan mouwei, zhi moubo, ye mouming, zheng mousheng and others obtained and controlled more than 70 stock accounts through over-the-counter financing, and used their funds and shareholding advantages to manipulate the "xx fashion" stock by means of low-level positions, reverse lifting, and continuous trading, causing the stock price to rise by 43.47% in a short period of time, deviating from the shanghai composite index by 47.46%. the gang made an illegal profit of more than 102 million yuan. in august 2022, the chaoyang intermediate people's court sentenced guan mouwei to eight years in prison for the crime of manipulating the securities market and imposed a fine of rmb 12 million. the other 11 people involved in the case were sentenced to fixed-term imprisonment ranging from one to seven years and fined.

the case of zheng mousheng and others manipulating the securities market in fushun, liaoning

in august 2020, the liaoning public security bureau opened an investigation into zheng mousheng and others for suspected manipulation of the securities market. the investigation found that from november 2019 to september 2020, zheng mousheng and others used more than 80 securities accounts under their control to manipulate the stocks of "xx food" and "xx packaging" through continuous transactions and transactions between accounts they actually controlled. during this period, zheng mousheng also colluded with chen mou and others to make investment suggestions on "xx packaging" stocks through live broadcasts on the internet, encouraging investors to buy, while zheng mousheng and others sold in reverse and successfully completed the "shipment". according to statistics, zheng mousheng and others made illegal profits totaling more than 200 million yuan. at present, the relevant personnel have been transferred to the fushun people's procuratorate for review and prosecution.

2. legal analysis

regarding the nature of the manipulation behavior of "continuous trading"

"continuous trading" manipulation, also known as "market manipulation", is a typical manipulation technique. the manipulator needs to raise a large amount of funds and use multiple securities accounts to raise the target stock price in the market, inducing investors to follow up and wait for the stock price to reach a certain height before clearing out and reaping profits. according to article 182 of the criminal law, if a person, alone or in collusion, concentrates financial advantages, shareholding or position advantages, or uses information advantages to jointly or continuously buy and sell, affecting the securities trading price or securities trading volume, and the circumstances are serious, it constitutes the crime of manipulating the securities market.in both cases, the criminal gangs used their own funds and shareholding advantages to continuously and intensively buy and sell target stocks over a certain period of time. their actions can be roughly divided into several stages, such as "gradually building positions and maintaining stock prices", "continuously increasing positions and raising stock prices", and "intensive declarations and completing shipments". they have the potential to influence or intend to influence securities trading prices or securities trading volumes, and meet the characteristics of "continuous trading" manipulation behavior.

legal provisions on "serious circumstances" of "continuous trading" manipulation

according to article 2 of the interpretation of the supreme people's court and the supreme people's procuratorate on several issues concerning the application of law in handling criminal cases of manipulating securities and futures markets (hereinafter referred to as the "judicial interpretation"), if a person has "held or actually controlled a number of circulating shares of securities that reached 10% or more of the total number of actually circulating shares of the securities, and carried out the first item of the first paragraph of article 182 of the criminal law to manipulate the securities market, and the cumulative trading volume for ten consecutive trading days reached more than 20% of the total trading volume of the securities during the same period", he shall be deemed to have "serious circumstances" as stipulated in the first paragraph of article 182 of the criminal law. in the above two cases, the stock holdings and trading volumes of the account groups involved during the manipulation period constituted "serious circumstances".

on the determination of joint crime

conspiring to manipulate the market, not only did multiple manipulation groups select target stocks and then trade simultaneously as agreed, but the funding intermediaries and stock recommendation "black mouths" also formed a common interest group with the manipulation groups. the funding intermediaries not only provided funding and accounts, but also invested in the manipulation and shared the profits according to the investment ratio. in the "shipping" stage, the stock recommendation "black mouths" were aware of the behavior of the manipulators, and also used online group chats, live broadcast rooms, etc. to deceive investors into buying at high prices, and helped them sell stocks at high prices to make a profit, suspected of constituting a joint crime of manipulation.in the above cases, the case-handling units retrieved multi-dimensional information related to the case and conducted a comprehensive analysis, restoring and portraying the gang’s organizational structure and the division of roles among its members, and locking in key evidence of multiple manipulating gangs conspiring and colluding to commit joint crimes.

iii. case comments

the two cases are typical examples of joint intelligence-guided investigations by the public security organs and the securities regulatory inspection departments. both parties fully utilized their respective professional advantages, strengthened the coordination between law enforcement and execution, enhanced working synergy, effectively and accurately collected various types of evidence, and improved the efficiency of research, judgment and investigation.