If you are lucky for a while, you will suffer if you are lucky all the time. Under the continuous strict supervision, the securities industry staff’s illegal behavior can not escape.
Recently, according to a criminal judgment published by China judicial document website, Guo Mou Gang, a former employee of a securities firm in North China, was sentenced to one year and six months’ imprisonment and a fine of 100000 yuan for the crime of trading with undisclosed information. Perspective of its illegal behavior, it is the industry commonly known as “rat storehouse.”.
To be specific, taking advantage of his position in charge of investment decision-making of securities self operated account, Mr. Guo traded 68 stocks with a turnover of more than 160 million yuan, but the amount of illegal profit was only 23900 yuan. Guo was arrested in January 2020 after he was issued a decision on administrative punishment by the CSRC.
For all kinds of “buyers”, their transactions can not only get a lot of information support, even when the amount of capital is large enough, it is possible to control the market. As a trader / insider of “first come first served”, it is hard to avoid being moved. Looking back to 2020, many fund managers / investment managers have been punished by the regulatory authorities for “rat trading”. For practitioners, often walk by the river, but also refuse “wet shoes.”.
160 million turnover, only 24000 profit
“Securities practitioners are not allowed to speculate in stocks”, such a regulatory red line should not be trampled. If employees use their own work convenience to start the idea of “rat trading”, they will face criminal sanctions.
Guo was sentenced to one year and six months’ imprisonment and a fine of 100000 yuan for the crime of using undisclosed information to trade, according to a criminal judgment released on January 21 by China judicial document website. Perspective of its illegal behavior, it is the industry commonly known as “rat storehouse.”.
Specifically, from 2013 to 2018, Guo worked as the head and investment manager of the second project Department of the Securities Investment Department of a securities company in North China, responsible for the investment decision-making of the company’s self operated securities account. According to the information of China Securities Association, Guo handled the practice registration in July 2013. At present, his registration status has been “cancelled”.
According to the public information, Guo has a doctoral degree. He joined the securities company in July 2011 and temporarily served as a researcher of the company’s research and development center. Even in the current rush for IPO, the prospectus shows that as of June 2020, there are only nine doctoral students among the more than 2000 employees of the securities firm.
Wang, manager of the investment department of the securities company, testified that Guo joined the company in 2011 and has been responsible for the investment decisions of two self operated accounts since 2013. Guo signed a confidentiality commitment letter with the company, and the company will hold compliance and confidentiality training from time to time, and relevant personnel will participate in it.
According to the survey, from January 2013 to January 2018, Guo took advantage of his position to obtain the unpublished information about the investment decision-making, trading and other aspects of the account, operated the “Guo 1” and “Wei she” securities accounts on his own or with others, and bought or sold 68 shares of the same stock in the company’s self operated securities account before or during the same period, with a total turnover of more than 160 million yuan. The massive transaction of more than 160 million yuan only brought illegal profits of 23900 yuan to Guo.
According to Guo’s sister, in July and August 2008, she cleared the securities account under her name. After that, the funds of the account came from her brother Guo, who also told her to buy stocks. In 2015, it bought a mobile phone number for Guo to use, and then basically did not operate the securities account.
In this regard, the Beijing Second People’s court held that Guo, as an employee of a securities company, used other unpublished information other than the insider information obtained by his position to violate the regulations and engage in securities trading activities related to the information. The circumstances are serious. His behavior has constituted the crime of trading with unpublished information and should be punished according to law.
In addition to one year and six months’ imprisonment and a fine of 100000 yuan, the court confiscated 23900 yuan of illegal profits and handed them over to the state treasury. However, during the court hearing, Guo’s family members have returned the confiscated funds.
Once for illegal stock speculation “no one fined three”
Such a large-scale illegal stock speculation, of course, has not escaped the attention of the SFC. In October 2019, the CSRC issued a fine for Guo Mou Gang’s holding and trading stocks in the name of his sister Guo Mou Xia, confiscating his illegal income of 723600 yuan and imposing a fine of 2170800 yuan.
Different from the contents of the criminal investigation, at that time, the SFC did not determine that Guo operated the account of his brother-in-law Wei, nor did it involve the issue of convergence transaction. In the administrative punishment, the CSRC determined that Guo invested 1.5895 million yuan and borrowed his sister Guo’s stock account to trade 75 stocks from July 18, 2011 to January 30, 2018, with a turnover of 106 million yuan and a profit of 723600 yuan.
In this regard, Guo Gangshen argued that he obtained the securities practice certificate on July 24, 2013, and his securities practice time should be calculated from that date. According to the review of CSRC, the practitioners of securities companies not only refer to the professionals engaged in securities business, but also include other staff engaged in party affairs, auxiliary support business and comprehensive management business. Their identification is not based on the premise that they have obtained the qualification or practice certificate.
In addition, Guo directly denied holding or trading stocks in the name of Guo, and his sister Guo and his nephew Guo admitted that they jointly operated the “Guo” securities account. However, according to the investigation of the CSRC, Guo is not clear about the securities trading, trading software and fund transfer of the securities account, nor about the margin trading business.
In the above-mentioned criminal judgment, Mr. Guo testified that he had not operated the relevant securities account, and that he had been instructed by Mr. Guo during the investigation of CSRC. This point has also been concerned by the court. It is considered that Guo’s behavior of interfering with the witness’s testimony after the case is committed does not belong to the lighter crime and does not meet the conditions of probation.
It is worth mentioning that after the implementation of administrative punishment, Guo did not pay the fine in time. In this regard, the SFC has issued a notice of penalty and forfeiture, but the notice has not been fulfilled. The CSRC then applied to the Xicheng District Court of Beijing for compulsory execution, and obtained the court’s ruling in August 2020.
“Rat trading” repeatedly prohibited
For all kinds of “buyers”, their transactions can not only get a lot of information support, even when the amount of capital is large enough, it is possible to control the market. As a trader / insider of “first come first served”, it’s hard to avoid being moved, and “rat trading” also emerges as the times require. Looking back to 2020, many fund managers / investment managers have been punished by the regulatory authorities for “rat trading”.
Among them, in September 2020, China Securities Regulatory Commission (CSRC) imposed a total penalty of 35.3836 million yuan on Liu Mou Jie, the manager of Yingxiang asset management fund, for using unpublished information for trading, and imposed a lifelong ban on her market entry. Before going to the private sector, Liu worked as the fund manager of e fund, Wanjia fund and other companies. During the period when Liu worked as the investment manager of private fund products in Yingxiang Asset Management Co., Ltd., the securities account transactions under his control converged to trade 91 stocks, with the amount of converged purchase of 335 million yuan.
In addition, in June 2017, the second Shanghai Municipal People’s court made a criminal judgment on Wang’s involvement in the crime of trading with unpublished information, and found that Wang made an illegal profit of more than 8.96 million yuan by controlling the use of six accounts with unpublished information. In December 2020, Beijing Securities Regulatory Bureau
The employee Wang made an administrative penalty. After converting according to the proportion of funds from husband and wife, he found that his illegal income from stock trading was 3.5714 million yuan, and the total penalty was 14.2856 million yuan.
According to the introduction, “rat warehouse” is a common term in the Chinese market, which refers to the staff of financial institutions who use the information to make profits after obtaining the investment and trading information of their own institutions. If they violate the criminal law, they are guilty of trading with undisclosed information.
According to the regulations, the crime of trading with unpublished information refers to that the employees of financial institutions and the staff of relevant regulatory departments or industry associations, who use other unpublished information other than the insider information obtained by their positions, violate the regulations, engage in Securities and futures trading activities related to the information, or express or imply that others engage in relevant trading activities.
It is worth noting that in the new “Securities Law”, the content of “trading with unpublished information” is included: employees of securities trading places, securities companies, securities registration and settlement institutions, securities service institutions and other financial institutions, staff members of relevant regulatory departments or industry associations are prohibited from using other unpublished information other than insider information obtained by their positions Public information, in violation of regulations, engaged in securities trading activities related to the information, or explicitly or implicitly engaged in relevant trading activities. If the use of unpublished information for trading causes losses to investors, they shall be liable for compensation according to law.
After the implementation of the new “Securities Law”, the administrative punishment on the capital market’s undisclosed information transactions will also achieve “no dead end” supervision. For practitioners, often walk by the river, but also refuse “wet shoes.”.