The actual controller of the listed company was severely punished

The actual controller of the listed company was severely punished

At the moment when the law enforcement has no dead ends, full coverage, and zero tolerance, there are still some people who can't resist the temptation of interest, break through the red line of professional ethics and the legal bottom line, and take risks to engage in insider trading and other violations. This small group of illegal entities not only includes the management of listed companies, the target parties of major asset restructuring, and even the actual controllers of listed companies may also engage in insider trading under the influence of interests. Xu Yusuo's insider trading "Yuanwang Valley 002161, Diagnostics " case is such a typical case.

Contacting the acquisition company when fleeing abroad

Xu Yusuo, as the actual controller of Shenzhen Yuanwang Valley Information Technology Co., Ltd. (hereinafter referred to as “Yuanwang Valley”), began to engage in insider trading from the beginning of Yuanwang Valley. In 2007, Yuan Yugu listed, Xu Yusuo began to actually control the use of his distant relatives Liao Mosong's securities account to frequently trade "Yuanwang Valley" stocks, which have a large number of illegal activities in window trading and short-term trading, but have not been discovered for a long time. The nature of the illegal act is bad.

Reaching out will be caught, and those who violate the law will pay a heavy price. In January 2017, the CSRC made an administrative punishment on the case of Yuan Yugu, the actual controller of Yuanwang Valley, and determined that Yuanwang Valley would invest at least 95.5 million euros to purchase BibliotheCA Group GmbH (hereinafter referred to as “B Company”. ") 100% equity matters belong to insider information, Xu Yusuo not only knows inside information on September 11, 2014, Xu Yusuo controls the use of Liao Mosong account to buy 250,000 shares of Yuanwang Valley to constitute insider trading before the inside information is released.

So, what is the investigation process of the entire case? What is the relationship between the overseas B company mentioned in the administrative penalty decision letter and the case? This is about to start from Xu Yusuo’s escaping in 2012.

From October 24, 2012 to November 27, 2014, Xu Yusuo fled the country on suspicion of bribery. He was in contact with Company B during the period of escaping and began to promote the acquisition.

The Administrative Punishment Decision Book shows that on August 28, 2014, Xu Yusuo, Yuanwanggu Secretary and Investment Manager made initial contact with the company's shareholders to discuss the valuation and investment structure of Company B; on September 11, 2014, both parties signed Non-disclosure agreement; on October 23, 2014, the two sides held talks again, and Yuanwang Valley proposed preliminary acquisition intentions.

As of October 10, 2014, the Supreme Law, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Foreign Affairs jointly issued the “Notice on Urging the Economic Crimes of Escaped Offenders Outside the Country”, according to the notice, from the date of the announcement to 2014. If you voluntarily surrender your crimes before December 1, you may voluntarily return to the country and may be punished according to law. On November 28, 2014, Xu Yusuo surrendered to China.

On January 22, 2015, the two sides negotiated again and drafted a letter of intent for investment from Yuanwang Valley. On March 25, 2015, the two sides formally signed an investment letter of intent. On March 26, 2015, Yuanwang Valley issued an announcement on major issues. The company's stock has been suspended since the day. On May 14, 2015, Yuanwang Valley issued an announcement to terminate the planning of this major asset restructuring. The company's shares will resume trading as of the date.

From all sorts of refusal to find someone "top pack"

However, after a wave of unrest, a wave of ups and downs, the parties involved in the case finally chose to fight against the end. Relevant persons told reporters that when the investigation of insider trading was initiated, Xu Yusuo’s judicial procedure for the bribery of the above units had not yet ended. The old things are gone, the new things are coming again, and Xu Yusuo has a great influence. Therefore, Xu Yusuo is recalcitrant and refuses to admit the illegal facts.

On July 20, 2015, the Exchange found an abnormal transaction in the supervision, and immediately the Shenzhen Bureau of the China Securities Regulatory Commission launched a preliminary investigation on the suspected insider trading of the relevant account. After obtaining the actual controller and source of funds of the account involved through the external investigation and evidence collection, the investigation team quickly found that there was a relationship between Xu Yusuo and Liao Mosong's account, and initially grasped the fact that Xu Yusuo borrowed the insider trading of the securities account of others.

Xu Yusuo has a strong anti-investigation awareness. According to reports, at the beginning of the investigation, Xu Yusuo insisted that he did not know Liao Mosong, did not understand the situation of Liao Mosong's securities account, and Liao Mosong said that his account entrusted a friend from Singapore to help. However, after the investigators conducted argumentation and pointed out the relationship between Xu Yusuo and Liao Mosong's account, Xu Yusuo and Liao Mosong also said that the two were actually distant relatives. Xu Yusuo transferred the money to Liao Mosong to lend Liao Mosong.

With the deepening of the investigation, Xu Yusuo gradually realized that it was impossible to easily evade the accountability, so he arranged for Liao Mosong to acknowledge that the account was operated by Liao Mosong and attempted to abandon the car.

The investigation team always insisted on attaching importance to objective evidence, and carefully observed the statements of the parties with obvious interests. Through careful analysis and argumentation of the objective evidence, it was finally determined that the account of Liao Mosong was actually controlled by Xu Yusuo and successfully investigated the case.

“After curing Xu Yusuo’s control of Xu’s account, the investigators began to ask about the account of Liao’s account. Xu Yusuo began to feel uneasy and said that he did not know Liao Mosong. The investigators immediately showed him Liao Mosong and Xu. The evidence of the high convergence of foreign account transactions, Xu Yusuo suddenly paused, after a long silence, he said that he could not remember, and asked for another day to explain." Relevant people recalled.

Formed a powerful shock from heavy punishment

The grievances of the people involved in the case are all in vain. In recent years, the CSRC has always regarded investigating and cracking down on insider trading as the focus of audit enforcement. In investigating and dealing with various violations of laws and regulations in the capital market, the inspection and law enforcement work has formed a good effect, which has a strong shock to the formation of the market, promptly curbed the spread of illegal acts, and triggered positive social response.

The CSRC recently announced the handling of cases in the first half of 2017. In the first half of the year, the CSRC initiated a preliminary investigation of 104 insider trading clues and officially opened 36 investigations. In addition to high-end insider trading such as mergers and acquisitions, the CSRC has continued to expand the field of insider information screening and intensified the verification of other important information such as “high delivery”, acquisition of listed companies, and significant changes in performance.

Xu Yusuo’s insider trading has a huge amount of illegal proceeds, and the nature of the illegal acts is very bad. The CSRC has imposed heavy penalties on the basis of the “no penalty for three” standard. The administrative penalty decision letter and the market banned decision show that according to the facts, nature, circumstances and social harm of the party's illegal acts, the CSRC decided to confiscate Xu Yusuo's insider trading illegal income of more than 5.4 million yuan and impose a fine of more than 16 million yuan. Xu Yusuo twice warned the short-term trading behavior, and imposed a fine of 200,000 yuan. At the same time, he took a five-year ban on securities market for Xu Yusuo.

Relevant persons said that the successful investigation and handling of the Xu Yusuo case showed that the CSRC had no dead ends, full coverage and zero tolerance for the investigation of insider trading behavior, and it was even more severely penalized for the insider trading behavior of the actual controller of the listed company.

In fact, the investigation and handling of this case demonstrates the determination and ability of the CSRC to crack down on illegal acts of insider trading, which not only makes the offenders pay the due price, but also has a great shocking effect on market participants. The insiders of listed companies and the relevant personnel who know the inside information due to their duties or work conveniences must strictly observe the professional ethics red line and the legal bottom line, and do not disclose inside information or suggest others to buy or sell stocks. No unit or individual can be lucky, profit-seeking, risk-testing, and using insider information to trade stocks for illegal gains.

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