Another case of insider trading.
Recently, the Beijing Securities Regulatory Bureau announced an administrative penalty for insider trading. Involved in insider trading was Luan Moumou, the then secretary of Lu Mouqiang, the then chairman and president of Oceanwide Holdings. Luan Moumou is the current chairman of Oceanwide Holdings.
On February 6, Oceanwide Holdings disclosed the announcement on the receipt of the administrative penalty decision by the chairman of the company for non-company matters.
During the sensitive period of inside information (from June 26, 2016 to October 27, 2016), Luan Moumou opened an account and transferred a huge amount of funds in a surprise manner, for the first time, concentrated and a large number of "Minsheng Holdings". Luan's transaction of "Minsheng Holdings" is highly consistent with the inside information and the time point of contact between Luan and the insider of the inside information, and the transaction behavior is obviously abnormal. Luan Moumou has no reasonable explanation or legitimate information about this**.
The Beijing Securities Regulatory Bureau determined that it was insider trading and ordered Luan Moumou to deal with the illegally held ** in accordance with the law and confiscate 563 illegal gains770,000 yuan, and imposed a fine of 1691A fine of $310,000.
On June 26, 2023, Oceanwide Holdings announced that after deliberation at the meeting, the company's board of directors agreed to elect Luan Moumou as the chairman of the company's 11th board of directors, with the same term of office as the company's 11th board of directors. According to the third quarter report of 2023, as of the end of September 2023, the total assets of Oceanwide Holdings are still nearly 100 billion, but the net assets attributable to shareholders of the parent company are -120$5.4 billion (unaudited).
The process of forming inside information
In May 2015, Minsheng Holdings acquired 100% equity of Minsheng Wealth Investment Management, a subsidiary of China Oceanwide. After the acquisition of Minsheng Wealth, Minsheng Holdings transformed into a listed company with small and medium-sized financial services including pawnbroking, insurance brokerage and wealth management.
In the first quarter of 2016, Minsheng Wealth's performance was at a loss, and Minsheng Wealth's profit target for 2016 was 40 million. Wang Mou, chairman of Minsheng Holdings, was also the chairman of Minsheng Wealth at that time, and personally grasped the operation of Minsheng Wealth, and Wang was more optimistic about the prospects of Minsheng Wealth and hoped to turn losses into profits.
In March 2016, Ma, the former president of Minsheng Wealth, proposed to resign, and Wang took over the operation and management of Minsheng Wealth. In May 2016, after Mr. Ma resigned, Mr. Wang concurrently served as the president and chairman of Minsheng Wealth.
Qu Mouming, the financial director of Minsheng Wealth, will report the company's performance of the month around the day, and the results are not much different from the actual results. In the second quarter of 2016, Minsheng wealth continued to lose, and the amount of loss continued to increase. No later than June 26, 2016, Qu Mouming had made a performance loss for Minsheng Fortune in the second quarter** and reported it orally to Wang. Chen Moudong, chief financial officer of Minsheng Holdings, also measured the performance of Minsheng Holdings including Minsheng Wealth at the end of June.
At the beginning of July 2016, after asking Chen Moudong about the loss of Minsheng Wealth, Chen Mouhua, President of Minsheng Holdings, proposed to Wang to transfer Minsheng Wealth, on the grounds that the loss of Minsheng Wealth was serious, far less than the profit target set at the beginning of 2016, and the overall performance of the listed company was greatly dragged down.
On August 20, 2016, the 2016 semi-annual report of Minsheng Holdings was basically completed, and Chen Mouhua and Wang discussed the transfer of Minsheng wealth.
On September 2, 2016, Wang and Chen Mouhua reported to Li Mouhai, the leader in charge of China Oceanwide, who believed that it was feasible and needed to ask Chairman Lu Mouqiang for instructions, but had asked Minsheng Holdings to handle the relevant preparations for assets first.
On September 14, 2016, Li Mouhai reported to Lu Mouqiang about the transfer of Minsheng wealth by Minsheng Holdings, and Lu Mouqiang agreed. On September 18, 2016, China Oceanwide held a board meeting by way of subpoena to consider and approve the acquisition of 100% equity of Minsheng Wealth from Minsheng Holdings.
On September 30, 2016, Minsheng Holdings issued a temporary suspension announcement, saying that it planned to disclose major matters.
On October 18, 2016, Minsheng Holdings issued an announcement confirming that the planned major events constituted a major asset restructuring.
On October 27, 2016, Minsheng Holdings announced that it intends to pay 100% of the equity of Minsheng Wealth held by the listed company to China Oceanwide for 350 million yuan, and China Oceanwide will pay the consideration in RMB cash. After the completion of this transaction, Minsheng Holdings will divest its wealth management business.
On November 2, 2016, Minsheng Holding Co., Ltd. resumed trading.
According to the Beijing Securities Regulatory Bureau, Minsheng Holdings' proposed transfer of Minsheng Wealth and divestment of wealth management business belonged to the inside information stipulated in Article 75, Paragraph 2, Item 5 of the 2005 ** Law before public disclosure. Inside information was formed on June 26, 2016 and made public on October 27, 2016 (hereinafter referred to as the "Sensitive Period of Inside Information"). Wang, as the director and deputy general manager of China Oceanwide, the chairman of Minsheng Holdings, and the chairman and president of Minsheng Wealth, is the decision-maker and leading person of Minsheng Holdings, and is an insider of this case.
Secretary Lu Mouqiang's insider trading "Minsheng Holdings".
During the sensitive period of inside information, Luan Moumou had telephone contact with Wang, an insider of inside information.
Luan Moumou was the secretary of Lu Mouqiang, then chairman and president of China Oceanwide Holdings Group. Mr. Wang is the director and deputy general manager of China Oceanwide, the chairman of Minsheng Holdings, and the chairman and president of Minsheng Wealth. Luan Moumou has more contact with Wang and is more familiar.
During the sensitive period of inside information, from June 28 to July 21, 2016, Luan Moumou and Wang had 5 phone calls.
Luan Moumou used the accounts of "Peng Mouhui" and "Shi Moujia" to trade "Minsheng Holdings". As of before the suspension, Luan Moumou operated the account group of "Peng Mouhui" and "Shi Moujia" with a total of 205 "Minsheng Holdings".480,000 shares, with a total amount of 1,575460,000 yuan. As of November 3, 2016, the account group trading "Minsheng Holdings" made a total profit of 563770,000 yuan.
During the sensitive period of inside information, Luan's trading behavior of "Minsheng Holdings" was obviously abnormal and had no reasonable explanation. The "Peng Mouhui" account was opened on June 27, 2016 at the request of Luan Moumou. The next day (June 28), Luan Moumou transferred a huge amount of money of 14 million yuan. The funds originated from the account of Luan's spouse "Shi Moujia".
On the night of the funds in place (June 28, 2016), Luan Moumou called Wang, an insider of inside information in this case, to call and contact. The next day (June 29), Luan Moumou operated the "Peng Mouhui" account **183050,000 shares of "Minsheng Holdings", amounting to 1396760,000 yuan, ** willingness is extremely strong. Before the suspension, Luan Moumou operated "Peng Mouhui" and "Shi Moujia" account group ** "Minsheng Holdings" for a total of 184290,000 shares, amounting to 1406340,000 yuan.
Shi Moujia's account had never traded "Minsheng Holdings" before June 30, 2016. The account also called Wang on the evening of June 28 after Luan Moumou called, on June 30**5790,000 shares of "Minsheng Holdings", a total of **15 before the suspension40,000 shares.
The Beijing Securities Regulatory Bureau believes that during the sensitive period of inside information, the account group of "Peng Mouhui" and "Shi Moujia" had the characteristics of surprise account opening, surprise transfer of huge funds, and a large number of ** "Minsheng Holdings" for the first time, and a large number of ** "Minsheng Holdings" single **, etc., Luan's transaction of "Minsheng Holdings" was highly consistent with the inside information and the contact time point between Luan Moumou and the insider Wang Moumou, and the trading behavior was obviously abnormal. Luan Moumou has no reasonable explanation or legitimate information about this**.
Luan Moumou contacted the insider Wang before the disclosure of the inside information, and the trading activities were highly consistent with the inside information, and the relevant trading behavior was obviously abnormal, without proper information** or reasonable explanation, violating the provisions of Article 73 and Article 76, Paragraph 1 of the 2005 ** Law, constituting an illegal act of insider trading under Article 2002 of the ** Law of 2005.
Argue that the calculation of illegal gains was incorrect
Luan Moumou and his ** people put forward in the hearing and statement and defense: first, the timing of the formation of inside information was obviously improper and contrary to common sense, and the inference that the transfer was determined based on the interim performance loss was inconsistent with the financial situation and normal business logic of Minsheng Wealth; second, it does not reflect the trading characteristics of using insider information; Third, the calculation of the actual illegal gains of the account involved in the case was inconsistent with the objective transaction, and the account involved in the case suffered a loss of about 1 million yuan one year after the disclosure of the inside information. In summary, it is requested that no administrative punishment be imposed.
After review, the Beijing Securities Regulatory Bureau believes that:
First, the inside information in this case was formed no later than June 26, 2016, which was the initial time of the motion, planning or decision-making of Minsheng Holdings' transfer of Minsheng Wealth. At the beginning of January 2016, the management of Minsheng Holdings had discussed the transfer of Minsheng Wealth. No later than June 26, 2016, Qu Mouming made a semi-annual performance**, and the cumulative loss of Minsheng Fortune in the first half year was nearly 30 million yuan, and reported to Wang. Wang, as the chairman of Minsheng Holdings and Minsheng Wealth, has the right to decide on the transfer, and the significant losses of Minsheng Wealth in the first half of the year are enough to prompt him to form a judgment. At this time, it is the initial time of the major event motion, which is in line with the normal logic of divesting major loss-making assets to avoid dragging down the financial report of the listed company for the current year, and the inside information is formed.
Second, during the sensitive period of inside information, the parties operated the ** account involved in the case with the characteristics of surprise account opening, surprise transfer of huge amounts of funds, and a single ** large-scale, concentrated and large number of ** "Minsheng Holdings", and the transaction of "Minsheng Holdings" by Luan Moumou was highly consistent with the formation and development of inside information and the contact between Luan Moumou and Wang Moumou, an insider of inside information, and the abnormal trading behavior was obvious. Luan Moumou has no reasonable explanation or legitimate information about this**.
Third, the calculation of the illegal gains in this case was correct, and the subsequent losses of the account involved in the case were caused by stock price fluctuations, and there was no causal relationship with the illegal acts involved in the case.
To sum up, the Beijing Securities Regulatory Bureau did not adopt the defense opinions of Luan Moumou and his ** person.
According to the facts, nature, circumstances and degree of social harm of Luan's illegal acts, and in accordance with the provisions of Article 202 of the 2005 ** Law, the Beijing Securities Regulatory Bureau decided: order Luan Moumou to dispose of the illegally held ** in accordance with the law, and confiscate 563 illegal gains770,000 yuan, and imposed a fine of 1691A fine of $310,000.
*:* Times Brokerage China Author: Zhang Yuxia.
Reviewer: Wang Bei.