“Science and Technology Innovation Board Daily”, April 20 (Reporter Li Mingming) Wang Zelong, the actual controller of CNNC Titanium Dioxide, will be punished by the administration for violating restrictive regulations.

On the evening of April 19, CNNC Titanium White, CITIC Securities, and Haitong Securities issued an announcement disclosing that the case of CNNC Titanium White's actual controller Wang Zelong, suspected of transferring shares in violation of restrictive regulations has been investigated by the Securities Regulatory Commission, and the “Advance Notice of Administrative Penalty” (hereinafter referred to as the “Notice”) has been issued to the subjects involved in the case.

According to the “Notice”, the case of Wang Zelong, Hong Haowei, CITIC China Securities Capital Management Co., Ltd. (“CITIC China Securities Capital”), CITIC Securities, Haitong Securities, and Han Yuchen suspected of transferring shares in violation of restrictive regulations has been investigated by the Securities Regulatory Commission. The Commission plans to impose administrative penalties according to law, order corrections and give warnings to relevant entities, and seize 78 million yuan of illegal proceeds and a fine of 157 million yuan.

Among them, the Securities Regulatory Commission plans to fine Wang Zelong, Hong Haowei, CITIC China Securities, CITIC Securities, Haitong Securities, and Han Yuchen for transferring shares in violation of restrictive regulations, to correct them, give a warning, and seize 78 million yuan of illegal proceeds; and fine Wang Zelong and CITIC China Securities Capital, CITIC Securities, Haitong Securities, and Han Yuchen for the joint offense of transferring shares in violation of restrictive regulations.

Hong Haowei, Wang Zelong, CITIC China Securities Capital, CITIC Securities, Haitong Securities, and Han Yuchen were fined 35 million yuan for the joint offense of transferring shares in violation of restrictive regulations.

Wang Zelong was fined 0.2 billion yuan for illegal disclosure of information.

The brief history of this incident is as follows: In July 2022, after CNCC's non-public stock offering was approved by the Securities Regulatory Commission, CITIC China Securities recommended a fixed increase and short plan to CNNC Titanium White actual controller Wang Zelong. “Customers can directly achieve fixed increase and empty arbitrage through the OTC derivatives trading desk, and settle profits early without waiting for a 6-month lock-up period”. There is a CNNC Titanium White employee stock ownership plan to lend 88 million shares. CITIC China Securities Capital designated four private equity product accounts to hedge CNCC shares. CITIC Securities formulates a securities lending plan. Haitong Securities participated in the revenue swap business and the first round of non-public offers. The issue price was set at 5.92 yuan/share on February 10.

From February 13 to 21, 2023, four private equity fund accounts sold 88 million shares of CNNC Titanium Dioxide shares, with an average transaction price of 7.63 yuan/share, a transaction amount of 671 million yuan, and illegal revenue of 77.53 million yuan. Until March 9, China Nuclear Titanium White announced the listing of non-public shares, with a limited sales period of 6 months. Wang Zelong has already made a huge profit of more than 60 million through illegal transfers of restricted shares. His friend Hong Haowei, who participated in the fixed increase of shares, has earned 14.19 million. CITIC Securities and Haitong Securities each have profits.

The “Science and Technology Innovation Board Daily” reporter noticed that on April 12, the three companies that were punished mentioned above collectively issued a notice stating that they had received the “Notice of Case Filing”, and the “Advance Notice of Administrative Penalty” was implemented on the 19th one week later.

An investor told the “Science and Technology Innovation Board Daily” reporter that the fixed increase arbitrage incident was not an isolated case in previous years. The current punishment is very strong and can serve as an example. The rapid implementation of the supervision of advance punishment of CNNC titanium dioxide controllers and related agencies indicates a shift in management mentality and reflects the regulatory ideas of strict supervision and comprehensive strengthening of penetrating supervision. Currently, the investor-centered capital market is being built at an accelerated pace.

On January 28 of this year, the Securities Regulatory Commission announced the complete suspension of restricted stock lending. On March 15, it issued the “Opinions on Strengthening the Supervision of Listed Companies (Trial)”, which clearly states that the transfer of restricted shares is prohibited. On March 18, the transfer mechanism was changed from “T+0” to “T+1”. In the “Administrative Measures for Shareholders of Listed Companies to Reduce Shareholdings of Listed Companies (Draft for Comments)” issued by the Securities Regulatory Commission on April 12, it was proposed that major shareholders of listed companies must not sell shares of the Company through securities lending.

CNNC Titanium was founded in Baiyin City, Gansu Province in 2001. Its majority shareholder, Wang Zelong, holds 33.45% of the shares. It is a well-known titanium dioxide manufacturer. Its main products are high-grade rutile titanium dioxide, which are widely used in coatings, plastics, rubber, ink, paper and other fields.

Since its establishment, CNNC Titanium has experienced three rounds of fixed growth. The first round occurred in 2020, with a transaction amount of 1,587 billion yuan, and the investors were individual investors; the second round began on December 31, 2022, with CITIC Securities; the third round was 52.88 yuan, with investors such as Haitong Securities, Guotai Junan Securities, and Dazhong Securities.

According to CIFA Venture Capital Connect - Central China data, there were 5 public investment incidents involving CNNC titanium dioxide, mainly for Vanadium Materials, Gansu Weilide, and HeZhi New Energy.

CITIC China Securities Capital was established in 2013 with a registered capital of RMB 2 billion. It is a platform for CITIC Futures to develop innovative risk management business and serve physical enterprises. The company's main business includes OTC derivatives business, cooperative hedging, market making business, warehouse receipt service, base difference trading, warehousing and logistics business.

CITIC China Securities Capital has 8 foreign investment funds, including Tianyu Digital Technology (Dalian) Group Co., Ltd., Shengtun Mining Group Co., Ltd.; there were 24 public investment incidents this year, mainly in the high-tech sector, mainly Shengtun Mining, Chengfei Integrated, Guoxuan Hi-Tech, and Hengtong Optoelectronics, etc.