CSRC Imposes Record Penalty in Insider Trading Case

Source: Regulation Asia Editors, Regulation Asia 2020-06-28

A Shanghai entrepreneur and his daughter were penalised a total 3.6bn yuan, representing a record fine and confiscation of illegal gains.

The CSRC (China Securities Regulatory Commission) has imposed record-breaking administrative penalties on an insider trading case.

According to the SCMP, a Shanghai entrepreneur Wang Yaoyuan and his daughter Wang Chengcheng were penalised a total CNY 3.6 billion, representing a record CNY 2.72 billion fine and confiscation of illegal gains.

The two are said to have used inside information to build a long position in Shanghai-listed Joincare Pharmaceutical Group ahead of the company’s disclosure of a stake sale to businesses controlled by two of China’s most renowned investors – Tencent founder Pony Ma Huateng and ZhongAn Online P&C Insurance chief executive Ou Yaping.

Wang Yaoyuan was said to have obtained information about the deal in March 2015 from multiple phone calls and meetings with Ou and the then controller of Hongxinhang, the company selling the 4.8% stake in question.

Wang, his daughter, and ex-wife proceeded to use 21 trading accounts to build a long position of 74.8 million Joincare shares. Two months later, the stock price had nearly doubled, yielding net gains of CNY 906.4 million – which will now be confiscated.

The CSRC’s notice on the penalty is available here.

CSRC Imposes Record Penalty in Insider Trading Case

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