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author | gao yan

editor: wu lijuan

source | yema finance

the capital market staged a drama of "ants" shaking the "elephant"!

on the evening of september 3, the lawyer team of xu feng from shanghai jiucheng law firm disclosed on its official account that they represented four investors in a lawsuit against xu xiang and xu changjiang for manipulating the securities of wenfeng shares (601010.sh), and won a great victory in the first instance. the nanjing intermediate people's court ruled:xu xiang and xu changjiang compensated the four investors liu, zhou, zhang, and wang for losses of 53,800 yuan, 859,700 yuan, 182,800 yuan, and 6,300 yuan respectively, with a total amount of 1,102,600 yuan. in addition, wenfeng shares bear joint and several liability for the above compensation, and can seek compensation from xu xiang and xu changjiang later.

source: first instance judgment

however, it is not yet known whether the three defendants will appeal to the court. if they do so within the time limit, the judgment will not take effect. if none of them appeal, the first-instance judgment will take effect.

according to lawyer xu feng, this case is also a model case selected by the nanjing intermediate people's court. there are four investors as plaintiffs in this case. the court entrusted the china securities capital market legal service center to settle the difference between the trading price of wenfeng shares and the actual price of the day, and the profit and loss of investors from the start date of the manipulation of the securities trading market (december 23, 2014) to the date of elimination of the impact (may 27, 2015).according to calculations, the losses of the four defendants were 53,800 yuan, 859,700 yuan, 182,800 yuan and 63,329,200 yuan respectively. the defendants in this case are: xu xiang, xu changjiang and wenfeng shares.the case was officially filed on july 19, 2021, and the verdict was announced after two public hearings on march 1, 2023 and may 6, 2024. xu feng mentioned that some eligible investors plan to file claims with the court in the future.

image source: canned image library

according to the first-instance judgment: xu changjiang and the authorized agent of wenfeng co., ltd. appeared in court, but xu xiang did not appear in court without a valid reason and was tried in absentia by the court.

all three were listed as defendants because wenfeng holdings is a listed company that mainly operates retail department stores. its department stores have been in business for more than 26 years. it is one of the companies involved in xu xiang's case of manipulating the securities market. its former chairman xu changjiang is also on the list of executives involved in the case.

in response to this, the staff of wenfeng securities department said:the company believes that it is jointly liable for compensation, so its economic liability is limited. after actually assuming the liability, the company has the right to claim compensation from xu xiang and xu changjiang. if the information disclosure requirements are met in the future, the company will make an announcement in a timely manner.

xu xiang's trading methods for wenfeng shares exposed

a careful reading of the first-instance "judgment" can reveal xu xiang's tactics and money-making model in operating wenfeng shares.

the court found that from october to december 2014, xu changjiang wanted to reduce his holdings in wenfeng group and the new youfei hotel, and after meeting xu xiang, he conspired and agreed on several occasions:xu xiang was responsible for the stock price in the secondary market and took over the stocks that xu changjiang sold through block transactions. xu changjiang transferred part of the equity of wenfeng shares to xu xiang, and controlled wenfeng shares to release information such as equity transfer and "high dividend and bonus", so as to jointly raise the stock price to achieve the purpose of cashing out by selling at a high level. the minimum price for selling was 14 yuan per share, and the excess was divided equally between the two.

source: first instance judgment

first, on december 20, 2014,in the name of his mother zheng suzhen, xu xiang signed a transfer agreement with wenfeng group to purchase 14.88% of the shares at a price of 860 million yuan.on december 23, wenfeng co., ltd., controlled by xu changjiang, issued an announcement, and zheng suzhen became the second largest shareholder of wenfeng co., ltd. on february 28, 2015, the 2014 annual report was announced, and the good news that 15 shares would be issued for every 10 shares and a cash dividend of 3.6 yuan was disclosed.from april 7 to may 13, 2015, xu changjiang sold 450 million shares through the block platform, and xu xiang sold all of them through other people's accounts on the secondary market. the stock price rose as much as 500% during this period.。

source: first instance judgment

the first instance judgment disclosed that from december 23, 2014 to may 13, 2015, xu xiang used 16 accounts including chen saijing to continuously buy and sell wenfeng shares through competitive bidding. there were 93 trading days during the period, and the account group had transactions on 40 trading days, accounting for 43.01%. after the announcement of the equity transfer, the account group's purchase volume increased significantly, and there were also purchases during the period of taking over xu changjiang's bulk trading platform shares. during the same period, the shanghai composite index rose by 44%, and wenfeng shares rose by 256%, a deviation of 211.8 percentage points. the turnover rate in the same period was 115% before, and the turnover rate during the period was 345%.xu xiang made a profit of about 450 million yuan by buying and selling wenfeng shares in the above way. xu changjiang sold his shares and cashed out 6.76 billion yuan, making a profit of 5.15 billion yuan and illegally earning 3.41 billion yuan.after xu changjiang reduced his holdings, according to the agreement between the two parties, he should have paid xu xiang more than 1 billion yuan in compensation, but (because the scandal was exposed) it has not yet been paid.

source: first instance judgment

the court determined that the manipulation began on december 23, 2014, and the impact was eliminated on may 27, 2015.the behavior of trading wenfeng shares during the period is causally related to the behavior of manipulating the securities trading market.xu feng mentioned that if investors suffered losses from trading wenfeng shares during this period, they could follow the example of this case and seek compensation through claims litigation.

xu xiang was arrested on november 1, 2015, wearing a white coat near the ningbo hangzhou bay bridge. xu changjiang resigned on september 7, 2016, and was released on bail on december 29 of the same year for suspected manipulation of the securities market.

image source: canned image library

on april 27, 2017, the qingdao intermediate people's court sentenced xu changjiang to two years and six months in prison, suspended for three years, and fined him 1.2 billion yuan for the crime of manipulating the securities market. the illegal gains of 2.5 billion yuan from xu changjiang were turned over to the state treasury in accordance with the law. the total of the two is 3.7 billion yuan.

earlier on january 22, 2017, xu xiang was convicted of manipulating the securities market by the qingdao intermediate people's court and sentenced to five years and six months in prison. after the court recovered the illegal gains, xu xiang's family had about 12 billion yuan in property left to be dealt with. in addition, xu xiang himself still had to pay a fine of 11 billion yuan. subsequently, xu xiang's wife ying ying filed for divorce to divide the property, but the divorce was not completed until xu xiang was released from prison in 2021.

xu xiang once publicly opposed the acquisition, and wenfeng shares gave in

on july 9, 2021, xu xiang was released from prison after serving his sentence. just four months later, on november 19, 2021, xu xiang and his mother zheng suzhen spoke out through the media: they firmly opposed the wenfeng shares asset acquisition plan.

the day before, wenfeng co., ltd. issued an announcement.the wholly-owned subsidiary intends to purchase 100% of the equity of four affiliated companies in cash, with a total transaction amount of 538 million yuan.

xu xiang elaborated on his views in detail to the securities times e-company: "the target assets are overvalued and of mediocre quality. the major shareholder of wenfeng shares is suspected of hollowing out the interests of the listed company. before the qingdao intermediate court has clearly identified the frozen assets, we do not want wenfeng shares to damage the interests of the listed company and the rights and interests of shareholders through this unreasonable acquisition plan.therefore, we clearly and firmly oppose this acquisition plan."

image source: canned image library

the name "xu xiang" and the statement of the second largest shareholder quickly attracted the attention of regulators and the support of investors. under pressure, wenfeng shares made xu xiang make concessions and compromises.

on november 22, 2021, wenfeng group, the controlling shareholder of wenfeng shares, and xu xiang issued a joint statement, saying that the two sides had in-depth communication and exchanges.it was unanimously agreed that in the face of the pressure of the epidemic and market competition, wenfeng co., ltd. needed to inject high-quality assets to integrate new business formats. both parties agreed that wenfeng co., ltd. would further optimize and adjust the acquisition plan.

image source: wenfeng group official microblog

simply put, xu xiang's side won!as of august 29, 2024, xu xiang's mother zheng suzhen still holds 14.88% of wenfeng shares and is still its second largest shareholder.we will have to wait and see how much power xu xiang can exert on this stock in the future.

how much investment does the "xu xiang family" have in the capital market?

after being released from prison, xu xiang has kept a low profile except for speaking out on the acquisition of wenfeng shares. he and his friends claimed that he read hundreds of books in prison and figured out many things in life.

previously, xu xiang had earned huge wealth in his more than 20 years in the capital market.

image source: canned image library

when the qingdao intermediate court pronounced its verdict in 2017,xu xiang's family has a total of more than 21 billion assetsamong them are the joint assets of xu xiang and ying ying, as well as assets under the name of xu xiang’s parents.

most of xu xiang's assets are held by his father xu bailiang and mother zheng suzhen, and xu xiang himself rarely appears on the list of shareholders.taking shanghai zexi investment management co., ltd., the core company of the "zexi group" where xu xiang is the legal representative, as an example, xu xiang, his mother suzhen and his father xu bailiang hold 40%, 55.2% and 4.8% of the shares respectively.

in terms of the nature of the assets, apart from cash, most of them are equity in listed companies, including at least six listed companies, including ningbo zhongbai (600857.sh), daheng technology (600288.sh), huali family (600503.sh), wenfeng shares (601010.sh), kangqiang electronics (002119.sz), and dongfang jinjue (delisted). among them, huali family and kangqiang electronics are held by companies under zexi investment, and only ningbo zhongbai and daheng technology are nominally controlled by xu bailiang and zheng suzhen, respectively.

xu xiang's 11 billion yuan fine was previously mixed up with his divorce and property division, and there has been no clear follow-up. on april 5, 2023, ying ying posted on weibo that the huangpu district people's court did not support ying ying's divorce lawsuit with xu xiang.

ying ying claimed that when the court was held in qingdao chengyang prison in august 2019, both she and xu xiang expressed their intention to divorce in court; when the second court was held in shanghai at the end of 2022, the couple still unanimously requested a divorce, but the huangpu district courtin the end, it was still concluded that the relationship between the couple had not broken down.

image source: canned image library

the court held that "it is difficult to determine that the relationship between the plaintiff and the defendant has indeed broken down. there is no principled conflict between the two parties. they have been separated for a long time only because of the criminal case, which also caused conflicts between the mother-in-law and daughter-in-law... the defendant has been released after serving his sentence, and the reasons for the emotional problems mentioned by the plaintiff have been eliminated."

source: judgment

mr. and mrs. xu xiang, who have not divorced, now need to use their family property to jointly pay for the claims from investors of wenfeng shares. according to lawyer xu feng, more investors are continuing to take the path of litigation to protect their rights.

lawyer xu feng emphasized that the civil judgment in this case of investors suing xu xiang and others for market manipulation reflects the court's protection of the rights and interests of small and medium-sized investors, and is of great significance for cracking down on illegal market manipulation, maintaining capital market order, and cultivating investor confidence.