CSRC Fines Pharma Share Fiddler, Fingers Film Star

CSRC Fines Pharma Share Fiddler, Fingers Film Star

Wang Juanjuan & Yuan Ziyi

Date: Tue, 08/14/2018 - 15:15 / source:Yicai
CSRC Fines Pharma Share Fiddler, Fingers Film Star
CSRC Fines Pharma Share Fiddler, Fingers Film Star

(Yicai Global) Aug. 14 -- The China Securities Regulatory Commission punished a huge stock price manipulator last week. Gao Yong, a natural person, used 14 individual securities accounts he controlled to manipulate stock prices in 2015 and thereby obtained massive illegal income.

CSRC confiscated CNY897 million (USD130 million) in illegal income and slammed Gao with a fine in the same amount for rigging Jinghua Pharmaceutical’s stock price.

The account of top Chinese movie star Huang Xiaoming was one of the 14 Gao used, the CSRC announced.

The actor was among the top 10 shareholders of Jinghua Pharmaceutical Group, per the company’s 2015 interim report. The period when Huang was a shareholder closely coincided with the time when Gao manipulated the company’s stock price.

This begs the question as to whether the owners of the securities accounts Gao manipulated should also suffer sanctions, and the way to dole out liability in such cases of wealth management by agency.

Stock price fiddling prosecutions generally only hold liable the person who controls the account and funds used to manipulate the market, irrespective of the actual owner and source of funds, another source told Yicai Global.

“Unless there is evidence that the account holder knows that the account and funds provided are used to manipulate the stock market, no liability applies. If the owner splits the profit, the owner is guilty as an accomplice to manipulation, but such evidence is hard to come by and may punish the innocent,” the source said.

Parties who violate real-name account management rules can only be subject to restrictive measures under current market administrative regulations, such as barring the owner from opening a new account within six months or listing it as a flagged or abnormal account in addition to revoking it or restricting its use.

Gao controlled two pooled fund trust plan sub-accounts and 14 natural person accounts and leveraged capital through trusts and other means, the agency charged, adding he put CNY2 billion (USD290 million) in play to further his scheme.

His fiddling drove Jinghua Pharmaceutical's share price to CNY91.8 (USD13.34) on June 5, 2015 from CNY22 on Jan.12 of that year in a fourfold rise in less than six months. Gao wrung profit of CNY897 million from this game.

Huang is famous for co-starring with Sylvester Stallone in last year’s Hollywood action film Escape Plan 2: Hades.

Editor: Ben Armour

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Keywords: Stock Price Manipulation, Celebrity Involvement, Financial Regulator, CSRC