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recently, the website of the china securities regulatory commission released an administrative penalty decision. the person punished this time, zhao yuanjun, was the head of the underwriting business department of everbright securities. in february 2020, he engaged in insider trading in violation of regulations while participating in the reorganization of "xingxing technology".

however, although zhao yuanjun was "lurking" precisely before "xingxing technology" released the announcement of major asset restructuring, he was eventually eliminated with a loss of 5.326 million yuan. in addition, according to the penalty decision, the csrc imposed a total fine of 4.6 million yuan on zhao yuanjun in accordance with the law. together with the amount of loss, zhao yuanjun's participation in the insider trading of "xingxing technology" this time lost nearly 10 million yuan. at the same time, the csrc also took measures to ban him from the securities market for 10 years.

fined for insider trading

according to the above-mentioned administrative penalty decision issued by the china securities regulatory commission, from september 17, 2018 to february 28, 2022, zhao yuanjun worked at everbright securities as a securities practitioner.

screenshot from the csrc official website

according to announcements from some listed companies, from 2018 to 2020, zhao yuanjun served as the head of the underwriting business department of everbright securities.

the reason for the punishment by the csrc this time was that zhao yuanjun engaged in insider trading of "xingxing technology". the relevant insider trading process and timeline are as follows:

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.

and just a few days after february 22, on february 25 and 28, 2020,zhao yuanjun used the securities account of "zhao moujiang" to buy a total of 1.602 million shares of "xingxing technology" with a transaction amount of 11.412 million yuan.

on march 15, 2020, "xingxing technology" issued a major asset reorganization announcement. "xingxing technology" intends to hire everbright securities as the independent financial advisor for this transaction.

as of august 18 and 19, 2021, zhao yuanjun sold all of his 1.602 million shares of "xingxing technology".the transaction amount was 6.096 million yuan. after calculation, the above transaction lost 5.326 million yuan.

in light of the facts, nature, circumstances and degree of social harm of the party’s illegal acts, the csrc has made the following penalty decision on zhao yuanjun:

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, the csrc pointed out that zhao yuanjun's violation of the law was quite serious. according to the first paragraph of article 221 of the securities law and the first paragraph of article 233 of the securities law of 2005, it was decided to ban zhao yuanjun from the securities market for 10 years.

several defense opinions were rejected

insider trading, market manipulation and information disclosure violations are known as the three major "cancers" of the capital market. these are also the targets of continuous and strict supervision. in the first half of this year, the china securities regulatory commission imposed penalties on 45 cases of market manipulation and insider trading, an increase of about 10% year-on-year, and punished 85 responsible entities, an increase of about 37% year-on-year, with a total amount of fines and confiscations of more than 2.3 billion yuan, an increase of about 9% year-on-year.

public information shows that before he became the head of the sponsorship business department of everbright securities,zhao yuanjun also worked as an insurance agent at huatai united securities for many years and is a senior investment banker.as we all know, insider trading is a forbidden area under the law, and zhao yuanjun's behavior has clearly crossed the red line. however, judging from the regulatory punishment cases in recent years, the violators of insider trading are mostly listed companies and relevant informed persons, and it is rare for the head of the sponsoring institution to "knowingly commit a crime" and directly engage in insider trading.

it is worth mentioning that during the hearing, zhao yuanjun raised the view that the timing of the formation of the insider information involved in the case was wrong, that he was unaware of the insider information involved in the case, that he bought "xingxing technology" based on friends' recommendations and personal research, and that the transaction behavior involved in the case was not abnormal. however, his defense opinions were not adopted by the csrc.

the csrc pointed out that zhao yuanjun is a legal insider and has a legal obligation to refrain from trading after learning about the relevant restructuring information. the reasons for his defense, such as recommendations from friends and personal research, do not constitute legitimate reasons to prevent insider trading.

in addition, the above cases also reflect the moral risks of some practitioners who illegally borrow other people's accounts to trade. in fact, whether it is borrowing other people's accounts or securities practitioners holding and buying and selling stocks in the name of others, it is a regulatory red line, and requiring employees to declare the securities accounts of their family members is also a routine operation in the securities industry. however, in recent years, there are many securities practitioners who use the accounts of relatives and other people to speculate in stocks illegally. for example, in december 2022, an administrative penalty decision issued by the hebei securities regulatory bureau showed that jin, a researcher at a securities research institute, learned about undisclosed information about a certain stock, informed his father and guided the transaction, with a total transaction of 4.11 million yuan. in the end, according to relevant regulations, jin was given a warning and fined 30,000 yuan.

regarding the above-mentioned penalties imposed on the company's former investment banking employees, everbright securities responded to the media and stated that it firmly supports the csrc's decision to impose administrative penalties on the company's former employees. it will strictly follow the company's accountability system regulations, hold those responsible accountable, and learn from the lessons to further carry out comprehensive self-inspection and rectification.