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insider trading by investment bank bosses

recently, the official website of the china securities regulatory commission disclosed a penalty information about insider trading by investment bank personnel. as an insider of the major asset restructuring of xingxing technology,zhao yuanjun, then an investment bank employee at everbright securitieshe bought 11.4122 million yuan of xingxing technology in advance, but eventually lost 5.3258 million yuan.the csrc imposed a total fine of 4.6 million yuan on zhao yuanjun and banned him from the securities market for 10 years.。

the penalty decision shows that from september 17, 2018 to february 28, 2022, zhao yuanjun worked at everbright securities as a securities practitioner.

public data shows thatzhao yuanjun is not an ordinary employee, but an investment banking tycoon who was once the general manager of the investment banking headquarters of everbright securities.

so how was this insider information formed?

on february 17, 2020, kang from everbright securities designed a major asset restructuring plan based on the situation of xingxing technology and financing rules.

on february 19, 2020, kang reported the situation of this major asset restructuring project to zhao yuanjun. zhao yuanjun reported the relevant matters to the relevant person in charge of everbright securities and instructed kang to conduct a feasibility analysis of the restructuring project.

on february 20, 2020, kang sent a relevant analysis report to zhao yuanjun.

on february 22, 2020, zhao yuanjun participated in a video meeting with xingxing technology regarding the project.

on march 15, 2020, xingxing technology issued an announcement on major asset reorganization.

during this period, zhao yuanjun quietly bought shares of xingxing technology.

after investigation, it was found that on february 25 and 28, 2020, zhao yuanjun used the securities account of "zhao moujiang" to buy a total of more than 1.6 million shares of "xingxing technology", with a transaction amount of approximately 11.41 million yuan. on august 18 and 19, 2021, zhao yuanjun sold all his positions, with a transaction amount of approximately 6.09 million yuan.after calculation, the above transaction loss is about 5.32 million yuan。

market data shows that from the time zhao yuanjun bought in to the time he sold out, the share price of xingxing technology fell by more than 50%.

on march 15, 2020, xingxing technology announced that it plans to purchase 48.75% of the equity of its controlling subsidiary jiangxi xingxing technology by issuing shares and paying cash, and raise matching funds. the transaction value will not exceed 1.6 billion yuan, and it is expected to constitute a major asset reorganization.at that time, the company hired everbright securities as the independent financial advisor for this transaction.

a year later, xingxing technology's performance exploded. in 2020, its performance suddenly turned from profit to a huge loss of nearly 2.5 billion yuan, and its stock price continued to plummet.on the two days when zhao yuanjun chose to sell all his stocks, the stock price of xingxing technology plummeted by 20% and 10.8% respectively.

fined 4.6 million yuan and banned from the market for 10 years

during the hearing, zhao yuanjun raised the following defense opinions: first, the timing of the formation of the insider information involved in the case was wrong;second, he was unaware of the inside information involved in the case; third, he bought "xingxing technology" based on the recommendation of friends and personal research, and the transaction behavior involved in the case was not abnormal;fourth, the punishment was too heavy, and the person actively cooperated with the investigation.

in this regard, the csrc does not accept zhao yuanjun's above-mentioned defense opinion for the following reasons:

first, the time when the insider information involved in the case was formed was accurately determined.

second, the evidence in the case is sufficient to prove that zhao yuanjun received the relevant major asset restructuring plan design on february 19, 2020, and participated in the relevant video meeting on february 22. zhao yuanjun is a legal insider and has a legal obligation to refrain from trading after learning about the relevant restructuring information. his defense reasons based on friend recommendations and personal research do not constitute legitimate reasons to prevent insider trading.

third, the csrc has fully considered the facts, nature, circumstances and degree of social harm of the parties' illegal acts when imposing the penalty, and the penalty is appropriate.

finally, the csrc made the following penalty decisions:

1. in accordance with article 187 of the securities law, zhao yuanjun is fined rmb 4 million.

2. pursuant to article 202 of the securities law of 2005, zhao yuanjun was fined rmb 600,000.

in addition, zhao yuanjun's illegal circumstances were relatively serious. according to regulations, the csrc decided to take measures against zhao yuanjun:10-year ban on securities market entry, from the date the csrc announces the decision, during the ban period, in addition to being prohibited from continuing to engage in securities business in the original institution or serving as a director, supervisor, or senior manager of the original listed company or non-listed public company, he or she shall not be allowed to engage in securities business in any other institution or serve as a director, supervisor, or senior manager of other listed companies or non-listed public companies.