(Yicai Global) Dec. 8 -- Ganfeng Lithium Group said it faces a regulatory fine of more than CNY4 million (USD573,000) due to alleged insider trading in 2020. Li Liangbin, chairman of the Chinese lithium salts giant, was also warned and fined CNY600,000 (USD86,000).

According to the statement released yesterday, the Jiangxi branch of the China Securities Regulatory Commission found in its investigation that Ganfeng Lithium bought shares of Jiangxi Special Electric Motor from the end of June to the start of July 2020 for an average price of CNY1.68 each. The lithium miner earned about CNY1.11 million by selling the equity on July 8 and 9 that same year.

During the same period, Ganfeng Lithium was also in talks with Jiangxi Special Electric Motor to participate in the latter’s private stock offering.

The regulator said the non-public share sale would probably lead to a change in Jiangxi Special Electric Motor’s controlling shareholder as well as actual controller, which is insider information per the securities law.

As a result, the CSRC confiscated Ganfeng Lithium’s illegal gains of about CNY1.11 million (USD159,000), fined it about CNY3.32 million (USD476,000) and warned Chairman Li, while also hitting him with a fine.

In August 2020, the two firms signed a memorandum, agreeing that Ganfeng Lithium would exclusively purchase all the non-public shares of the other party and become its controlling shareholder, making Li the actual controller of Jiangxi Special Electric Motor.

Both firms are registered in China’s southeast Jiangxi province. Jiangxi Special Electric Motor ventured into the lithium battery sector in 2009, while Ganfeng Lithium, founded in 2000, has become the world’s third-largest and China’s biggest supplier of lithium compounds.

The Shenzhen-traded shares of Ganfeng Lithium [SHE: 002460] closed down 1.2 percent at CNY80.40 (USD11.53) today, while its Hong Kong-listed stock [HKG: 1772] rose 2 percent to HKD69 (USD8.86).

Editor: Peter Thomas