Securities Regulatory Commission Explains In Detail The Merits And Demerits Of "Pseudo Market Value Management". Market Value Management Should Strictly Abide By Three Red Lines And Three Principles

After investigating the case of Shi and others manipulating the stock prices of "Zhongyuan home" and "Litong Electronics", recently, the CSRC and the public security organs, relying on the clue joint research and judgment mechanism, combined with the monitoring findings of the exchange, started the joint investigation of a number of cases of vicious market manipulation according to law, which was taken as the key case of the special law enforcement action of the CSRC in 2021.

On September 24, the CSRC reported that significant progress had been made in the cases of malicious manipulation of stock prices such as "Nanling Minbo", "Jinchuang group" and "Haozhi electromechanical". Recently, the China Securities Regulatory Commission (CSRC) cooperated with the public security organs to launch a joint operation to arrest and bring to justice the main suspected criminals in three cases of market manipulation.

Among the three major cases mentioned above, there was a figure of "Ye" who created favorable conditions for market manipulation and sought illegal interests. According to the reporter of 21st century economic report, the "Ye" is the Ye Fei of the "capital broker" who was disclosed on the Internet.

Ye, a capital broker, is caught

"The above-mentioned cases are criminal cases of organized market manipulation discovered by the CSRC and the public security organs. They reflect the grey and black interest chain of manipulation gangs, capital distribution agencies, market brokers, and" black mouths "of the stock market. They are the key types of violations that the SFC has" zero tolerance "to crack down on in recent years," Gao Li, a spokesman for the CSRC, said on September 24.

According to the investigation by the CSRC, in the stock price cases of "Nanling Minbo", "Jinchuang group" and "Haozhi electromechanical", from August 2020 to December 2020, Liu Yiye Gang controlled dozens of securities accounts by means of stock allocation and entrusted financial management, and was suspected of manipulating the stocks of "Nanling Minbo" by means of centralized capital advantages and stock holding advantages, making illegal profits of tens of millions of yuan.

While ye knew that Liu Yiye and others manipulated the stock price of "Nanling civil explosive", he actively provided relevant help and suggestions to create favorable conditions for market manipulation and seek illegal interests. Since 2019, Liu's gang and Yan's gang have been suspected of manipulating the stock prices of "Jinchuang group" and "Haozhi electromechanical" respectively by means of continuous trading and counter dumping, with a huge amount of money involved. The investigation also found that the employees of some organizations are suspected of using their positions to facilitate and manipulate the gangs to transfer interests.

In view of the above-mentioned personnel's illegal acts meet the standard of criminal filing and prosecution, the CSRC will transfer the relevant case clues to the public security organ according to law. Recently, the China Securities Regulatory Commission (CSRC) cooperated with the public security organs to launch a joint operation to arrest and bring to justice the main suspected criminals in three cases of market manipulation.

It is worth mentioning that ye, who provided help and suggestions for Liu and others to manipulate the stock price of "Nanling Minbo", is the one who reported dozens of listed companies manipulating stock prices.

On July 23 this year, China Securities Regulatory Commission (CSRC) reported the progress of investigation into the cases of manipulating the stock prices of "Zhongyuan household" and "Litong Electronics". The investigation results show that Shi and other manipulation gangs controlled dozens of securities accounts and raised the stock prices of "Zhongyuan home" and "Litong Electronics" with a trading amount of more than 3 billion yuan, and the relevant investigation work has been carried out in an all-round way.

Two months ago, ye Fei publicly disclosed on the Internet that in order to evade regulatory restrictions, Zhongyuan home furnishing Co., Ltd. reached an agreement with Ye Fei himself, intending to manipulate the stock price and sell the stock for profit. Because of this, ye Fei also thinks that his report helps to crack down on "pseudo market value management".

However, the 21st century economic reporter found that there was no evidence that the stock price manipulation cases such as "Zhongyuan home" and "Litong Electronics" were related to the relevant listed companies and the directors, supervisors and senior executives of the companies. This is not consistent with the situation that Zhongyuan household entrusted the trader to carry out "pseudo market value management" reported by Ye Fei. In addition, in the list of enterprises previously disclosed by Ye Fei, there was no name of "Litong Electronics".

In this regard, some regulators close to the exchange disclosed to the 21st century economic reporter that the exchange had already paid attention to the manipulation of the share prices of "Zhongyuan home" and "Ritong Electronics" by relevant account groups before May this year, and it was brought into the focus of monitoring. It can be said that the content of Ye Fei's disclosure is still different from the actual situation, and the reason why the regulatory authorities cracked down on the illegal behavior of stock price manipulation did not come from the "report gate" in May.

Previously, Wu zetao, senior partner of Bank of China law firm in Beijing, told reporters of the 21st century economic report that ye Fei, while reporting the relevant subjects involved in market manipulation, also indicated that he had participated in the "matchmaking" of relevant violations. As for whether such "lead and bridge" behavior is suspected of violating the law and regulations or even constituting an accomplice in the crime of market manipulation, It is necessary to make a comprehensive judgment based on Ye Fei's knowledge, subjective purpose, intention contact with other actors, depth of participation and illegal income.

"Even if ye Fei takes the initiative to report other people's illegal behaviors to the relevant departments, it does not mean that he can" withdraw from the whole body. "Wu zetao said that at present, both the criminal law and the judicial interpretation on market manipulation have stipulated the circumstances for reducing the punishment of criminals. However, it should be noted that both the law and the judicial interpretation stipulate that punishment can be reduced or exempted, As for whether ye Fei's reporting of other people's illegal and criminal acts meets the above-mentioned conditions of lighter punishment or exemption from punishment, it depends on how the procuratorial organs and the court determine the nature of Ye Fei's own behavior and the importance of his reporting and exposing other people's behavior to find out the case.

Grasp the legal boundary of market value management of listed companies

"In the name of market value management, manipulation of insider trading in the market and seeking illegal benefits through market value management have seriously damaged the equity and order of the capital market, seriously interfered with the development of the capital market, seriously damaged the legitimate rights and interests of investors, and was not conducive to the improvement of the quality of listed companies, which has been the focus of a long-term crackdown by the CSRC," the same day's press conference said, Guo Ruiming, deputy director of the supervision department of listed companies of the CSRC, also analyzed the behavior of "pseudo market value management".

Guo Ruiming said that to correctly grasp the legitimacy boundary of market value management of listed companies, we should strictly abide by the "three red lines" and "three principles".

The "three red lines" are: it is forbidden to manipulate the information of listed companies, control the pace of information disclosure, selectively disclose information, disclose false information and cheat investors; It is strictly forbidden to engage in insider trading or manipulation of stock prices to seek illegal interests and disrupt the "three public" order of the capital market; It is strictly prohibited to damage the interests of listed companies and the legitimate rights and interests of small and medium-sized investors.

The "three principles" are as follows: first, the subject suitable for market value management must be a listed company or other qualified subject permitted by law. Except as clearly authorized by laws and regulations, the actual controller of the controlling shareholder and other subjects of the board of directors and supervisors shall not implement market value management in their own name; Second, the real name of the account. The account for direct securities trading must be the real name account of the listed company or other entities permitted by law; Third, full disclosure, must be true, accurate, complete, timely and fair disclosure of information in accordance with the current provisions, no manipulation of information, no drawer agreement.

"The fundamental purpose of market value management is to improve the quality of listed companies. Listed companies should improve their awareness of compliance, operate in accordance with the law and operate in compliance with the law. On the premise of complying with the law, we should use capital market tools to reasonably improve the level of corporate governance, and resolutely resist pseudo market value management," Guo Ruiming said.

It is reported that in the next step, the CSRC will fully implement the "opinions on strictly cracking down on securities illegal activities in accordance with the law" jointly issued by the central office and the State Council, and further build a comprehensive law enforcement system with all-round monitoring, efficient investigation and handling, multi-department cooperation and three-dimensional accountability. Strictly crack down on illegal behaviors such as market manipulation in the name of market value management.

On the one hand, we should adhere to the zero tolerance policy, pay close attention to market dynamics, account linkage and abnormal trading, crack down on illegal and illegal behaviors such as manipulating market insider trading, strengthen the link of execution and strengthen the deterrence of law enforcement. On the other hand, it will adhere to the principle of marketization and legalization, improve the relevant information disclosure system, further improve the transparency and effectiveness of the market, and actively create a policy environment conducive to the promotion of long-term value for listed companies.

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