According to Caixin News on September 14th (Editor: Shen Chao), recently, the China Securities Regulatory Commission (CSRC) issued an administrative penalty decision, imposing fines totaling nearly 0.167 billion yuan on individual Yan Wei for his illegal manipulation of the securities market.

It is reported that during the period of manipulating Jiangsu Jinling Sports Equipment, the stock price doubled, but after the selling was completed, the stock price of Jiangsu Jinling Sports Equipment began to decline rapidly, with a drop of over 20% in ten trading days.

Manipulating 39 accounts to trade Jiangsu Jinling Sports Equipment illegally, resulting in over 80 million in illegal profits and facing heavy penalties.

According to the administrative penalty decision, from September 4, 2017 to April 18, 2019 (referred to as the "manipulation period"), Yan Wei controlled and used 39 securities accounts to trade the stock of "Jiangsu Jinling Sports Equipment".

During the manipulation period, Yan Wei used his financial and shareholding advantages to engage in consecutive buying and selling, making false declarations, and conducting manipulative trades, controlling the use of account groups, affecting the trading price and volume of "Jiangsu Jinling Sports Equipment", and making a profit of 83.3422 million yuan.

Yan Wei's actions were ultimately recognized by the China Securities Regulatory Commission (CSRC) as market manipulation, and the CSRC imposed the punishment of "one penalty for every illegal profit", confiscating his illegal proceeds of 83.3422 million yuan and imposing a fine of the same amount, totaling nearly 0.167 billion yuan.

Using the advantage of funds and holding assets, engaging in trade manipulation and false declarations.

Specifically, in terms of manipulation methods, Yi Wei concentrated funds and holding assets to engage in continuous buying and selling. During the manipulation period, Yi Wei-controlled account groups participated in trading for a total of 394 trading days. The period from September 4, 2017 to October 23, 2018 was the period of building positions and pushing up prices, while the period from October 24, 2018 to April 18, 2019 was the period of selling off.

The account group collectively bought 39.4243 million shares of Jiangsu Jinling Sports Equipment through competitive bidding, with a total amount of 1.549 billion yuan. Among them, on 240 trading days, the volume of buy transactions accounted for more than 10% of the market, on 141 trading days it exceeded 20%, on 64 trading days it exceeded 30%, and on 29 trading days it exceeded 40%; On 241 trading days, the volume of buy transactions ranked first in the market.

The account group collectively sold 38.0108 million shares of Jiangsu Jinling Sports Equipment through competitive bidding, with a total amount of 1.555 billion yuan. Among them, on 224 trading days, the volume of sell transactions accounted for more than 10% of the market, on 116 trading days it exceeded 20%, on 56 trading days it exceeded 30%, and on 23 trading days it exceeded 40%; On 227 trading days, the volume of sell transactions ranked first in the market.

From September 4, 2017 to April 18, 2019, the account group held a stake in Jiangsu Jinling Sports Equipment for more than 5% of the outstanding shares on 160 trading days. The highest stake was on October 23, 2018, reaching 8.57%. Therefore, the China Securities Regulatory Commission concluded that the account group had a funding advantage and a holding advantage.

In addition, there were securities transactions between the accounts controlled by Yi Wei. During the manipulation period, the account group controlled by Yi Wei traded between its own controlled accounts for 277 trading days; among them, on 69 trading days, the volume of closed-loop transactions accounted for more than 10% of the market, on 13 trading days it exceeded 20%, on 5 trading days it exceeded 30%; The highest closed-loop ratio was on December 5, 2018, reaching 34.29%.

Another type of behavior is false declarations. During the manipulation period, the account group controlled by Yi made false declarations on a total of 6 trading days, with declared buy volume accounting for more than 30% of the market volume during the same period, and cancelled orders accounting for more than 50% of the total declared volume of the account group.

From doubling in stock price to a 20% sharp decline, the stock price of Jiangsu Jinling Sports Equipment has experienced significant volatility.

During the market manipulation by Yi Wei, the stock price of Jiangsu Jinling Sports Equipment experienced significant fluctuations. The price of the stock rose by 116.7%, doubling from the opening price of 18.16 yuan on September 4, 2017 to the closing price of 39.29 yuan on April 18, 2019.

Statistical manipulation during the upward trend (red box interval in the figure) and the selling period (blue box interval in the figure) can be seen that during the initial accumulation phase, the stock price of Jiangsu Jinling Sports Equipment showed a volatile upward trend, but the increase was relatively moderate.

However, when entering the selling phase, the stock price of Jiangsu Jinling Sports Equipment suddenly rose sharply. After reaching the price peak and completing the selling, the stock price experienced a drastic decline in a short period of time, with a decrease of 22.57% in 10 trading days.

Has the manipulation behavior exceeded the 2-year administrative penalty time limit? CSRC response

It is worth mentioning that during the hearing process, Yi Wei and his representatives also raised defense arguments regarding the legitimacy of the transactions, the standards for identifying market manipulation behaviors, and the time limit for administrative penalties for manipulation behaviors, and requested no punishment or lenient punishment.

They stated that, first, Yi Wei traded Jiangsu Jinling Sports Equipment stocks based on legitimate investment purposes, without seeking unlawful benefits, and subjectively did not have the intention to manipulate the securities market, thus not constituting market manipulation behavior. Second, the standards for identifying market manipulation behaviors lack clarity, leading to incorrect determination results. Third, the determination of the manipulation period and the end date of the manipulation behavior is incorrect. Fourth, there is a lack of evidence in the determination of the scope and duration of control accounts. Fifth, there is insufficient evidence to prove the harmful effects of the trading activities involved in the case. Sixth, the manipulation behavior has exceeded the 2-year administrative penalty time limit. Seventh, the calculation of the illegal gains amount is incorrect.

In response to this, the China Securities Regulatory Commission (CSRC) provided a response to each of the arguments.

First, Yi Wei not only controls his own securities account and the securities account of management products, but also borrows other people's securities accounts. By using three manipulation techniques, he repeatedly and extensively trades 'Jiangsu Jinling Sports Equipment', which is enough to prove his intention to manipulate the stock price. How to allocate the illegal gains does not affect the determination of the behavior of manipulating the securities market.

Second, I will investigate the illegal activities of manipulating the securities market in accordance with the "Securities Law" of 2005 and the "Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on the Application of Laws in Handling Criminal Cases of Manipulating the Securities and Futures Markets", which is based on the law.

Third, the facts about the scope and duration of the controlled accounts are clear, and the evidence is sufficient.

Fourth, the determination of the manipulative period and the end date of the manipulative behavior is correct.

Fifth, Yi Wei's manipulative behavior has had a significant impact on the price of 'Jiangsu Jinling Sports Equipment'. During the period under investigation, the stock price of 'Jiangsu Jinling Sports Equipment' rose by 112.13%, while the corresponding sector composite index fell by 13.15%, resulting in a deviation of 125.27%. Other market factors that may affect stock prices cannot be used as a reason to exclude Yi Wei's behavior in constituting the manipulation of the securities market.

Sixth, Yi Wei's manipulation of 'Jiangsu Jinling Sports Equipment' ended on April 18, 2019. The relevant evidence is sufficient to prove that the time when I discovered the illegal clues in this case did not exceed the statute of limitations for punishment.

Seventh, the calculation of the illegal gains is correct, and some of the opinions of the parties involved have been partially adopted.