Shanghai Taihehui, after being fined for transferring the investment and management responsibilities of its private equity products to Shanghai Pangzeng Investment for five months, is now under investigation and has concluded its handling of the case of manipulating the "Kuaijishan Shaoxing Rice Wine" stock by Shanghai Pangzeng Investment's products.

The latest disclosure from the Shanghai Regulatory Bureau states that Mr. Jin, Shanghai Taihehui, and Mr. Liu all requested no administrative penalties at the hearing.

However, the bureau believes that Mr. Jin and Shanghai Taihehui, through collusion, concentrated their financial advantage and shareholding advantage to engage in continuous buying and selling, which affected the trading price and volume of the "Kuaijishan Shaoxing Rice Wine" stock. This behavior constitutes market manipulation. It was ultimately decided: 1) The imposition of a fine of 2.4 million yuan on Mr. Jin and Shanghai Taihehui (which was renamed to Shanghai Dengcheng Consultancy in January of this year), with a fine of 1.2 million yuan on Mr. Jin and a fine of 1.2 million yuan on Shanghai Dengcheng Consultancy; 2) A warning and a fine of 0.5 million yuan to Mr. Liu.

In order to maintain the stock price of "Kuaijishan Shaoxing Rice Wine" and address stock pledge risks, Mr. Jin, the legal representative and chairman of Jinggong Group at the time, and Mr. Liu, the president of Shanghai Taihehui, communicated and discussed. In July 2017, Shanghai Taihehui's investment committee approved the increase in holdings of stocks such as "Kuaijishan Shaoxing Rice Wine" in the secondary market. In order to ensure the increase in holdings of stocks such as "Kuaijishan Shaoxing Rice Wine" by Taihehui, and with approval from Mr. Jin, Jinggong Group, Zhejiang Jinggong Holdings, and Shaoxing Zhongfu Holdings successively provided funds to companies controlled by Shanghai Taihehui.

From December 19, 2017, to April 8, 2019 (referred to as the manipulation period), Shanghai Taihehui controlled a total of five accounts (referred to as the account group involved in the case), namely, Pangzengtianyi 5, Pangzengtianyi 12, and Pangzengtianyi 13, and traded the "Kuaijishan Shaoxing Rice Wine" stock. According to calculations, the account group involved in the case bought a total of 43.2074 million shares of "Kuaijishan Shaoxing Rice Wine" stock during the manipulation period and sold all of them, resulting in a total loss of approximately 1.739 million yuan.

According to the China Association of Private Equity, the three private fund products mentioned above are all from Shanghai Pangzeng Investment. The first two products have been liquidated, and the institutional information was last updated in September of last year.

On April 20 of this year, the Shanghai regulatory bureau decided to order Shanghai Pangzeng Investment to make corrections, and both Li, the former executive affairs partner, were warned and fined 0.03 million yuan. The bureau pointed out that from July 2017 to November 2019, Shanghai Pangzeng, as the manager of Pangzeng Tianyi No. 2, Pangzeng Tianyi No. 3, Pangzeng Tianyi No. 5, Pangzeng Tianyi No. 8 structure, Pangzeng Tianyi No. 9 private placement, Pangzeng Tianyi No. 11 private placement, Pangzeng Tianyi No. 12, Pangzeng Tianyi No. 13 and other private funds, failed to fulfill the responsibilities of the private fund manager, and entrusted the investment and management responsibilities to Shanghai Taihehui.

How did you lose more than 1.7 million during the manipulation period?

According to the Shanghai regulatory bureau, the manipulation period can be divided into four stages:

In the first stage (from December 19, 2017 to July 10, 2018), with buying and establishing positions as the main strategy, the total number of shares held by the account group involved in the case and the percentage of shares in circulation rose from 0 to 1.02% and 1.26% respectively.

The total amount of bidding trades executed by the account group involved in the case was 7.5242 million shares, corresponding to a purchase amount of 82.2784 million yuan; the total amount of bid trades executed was 2.475 million shares, corresponding to a sale amount of 26.5137 million yuan. The ratio of buying and selling trading volume to the total bid trading volume in the market during the period was 3.7% and 1.22%, respectively.

In the second stage (from July 11, 2018 to October 17, 2018), with boosting the stock price as the main strategy, the total number of shares held by the account group involved in the case and the percentage of shares in circulation rose to 4.05% and 5.03% respectively.

The total amount of bidding trades executed by the account group involved in the case was 17.8186 million shares, corresponding to a purchase amount of 0.178 billion yuan; the total amount of bid trades executed was 2.7298 million shares, corresponding to a sale amount of 26.9995 million yuan. The ratio of buying and selling trading volume to the total bid trading volume in the market during the period was 33.80% and 5.18%, respectively.

The account group involved in the case submitted a total of 3520 buy orders for a total of 26.0376 million shares, of which 2601 buy orders for a total of 18.3589 million shares had prices not lower than the market price before the order, accounting for 70.51% of the total buy orders in the same direction during this period; 2034 buy orders for a total of 16.1266 million shares had prices not lower than the best ask price before the buy order, accounting for 61.94% of the total buy orders in the same direction during this period. Among the 65 trading days, the account group involved in the case had the highest number of buy orders on 39 trading days, with more than 10% of the market's total buy orders on 41 trading days, more than 20% on 30 trading days, and more than 30% on 18 trading days.

During this period, the account group involved in the case ranked first in terms of the number of consecutive bidding buy transactions in 43 trading days. The percentage of bidding buy transaction volume exceeded 10% for 44 trading days, exceeded 20% for 36 trading days, exceeded 30% for 27 trading days, and exceeded 40% for 20 trading days.

At the same time, the stock price of "kuaijishan" rose by 12.62%, deviating from the sse composite index by 22.03%.

In the third phase (October 18, 2018 to February 19, 2019), the account group involved in the case increased its total shareholding and the proportion of shares held in circulation to 4.89% and 6.08% respectively, focusing on maintaining the stock price.

The account group involved in the case accumulated a bidding buy transaction volume of 8.3249 million shares, corresponding to a buying amount of 77.5361 million yuan. The accumulated bidding sell transaction volume was 4.1579 million shares, corresponding to a selling amount of 39.7414 million yuan. The proportion of buying and selling transaction volume to the total cumulative bidding transaction volume in the period was 11.17% and 5.58% respectively.

In the fourth phase (February 20, 2019 to April 8, 2019), the account group involved in the case gradually reduced its total shareholding and the proportion of shares held in circulation to 0, focusing on selling and clearing the position.

The account group involved in the case accumulated a bidding buy transaction volume of 0.4836 million shares, corresponding to a buying amount of 4.7147 million yuan. The accumulated bidding sell transaction volume was 24.7886 million shares, corresponding to a selling amount of 0.248 billion yuan. The proportion of buying and selling transaction volume to the total cumulative bidding transaction volume in the period was 0.31% and 15.86% respectively.

On June 6th of this year, the Shanghai Regulatory Bureau held a hearing and listened to the relevant statements and defense opinions. All three parties requested not to be subject to administrative penalties.

Market manipulation has been identified as illegal behavior.

After review, the Shanghai Regulatory Bureau adopted the opinion of the party concerned regarding the nature of the 10 million yuan mentioned above and made adjustments in the penalty decision. The bureau did not adopt other statements and defense arguments raised by the party concerned.

The Shanghai Regulatory Bureau believes:

1) Sufficient evidence in the case proves that Jin and Shanghai Taihehui conspired to concentrate their funds and stock advantages to manipulate the trading price and volume of the stock 'Kuaijishan' in order to respond to stock pledge risks.

2) The party concerned has admitted to engaging in illegal activities during the investigation. Although the party concerned has expressed different opinions in statements, defense and hearings compared to the statements made during the investigation, considering that the evidence in the form of questioning transcripts in the case is in compliance with the requirements, directly pointing to the main facts of the case and mutually confirming each other, and the subsequent statements by the party concerned are considered as counter arguments and have not been reasonably explained, the bureau does not adopt them.

3) Regarding the funds provided by Jinggong Group: 1) The timing of the transfer of the funds and the transactions of the account group involved in the case are close, and they can be mutually confirmed by the evidence in the case. 2) The party concerned lacks factual basis for the claim of the nature of 67 million yuan funds, and the relevant claims are contradictory and difficult to be self-consistent. The evidence submitted by Jin and Shanghai Taihehui cannot achieve their proving purpose. 3) Whether the listed company has issued an announcement of major shareholder shareholding does not affect the determination of market manipulation behavior in this case, and the illegal activities in this case involve transactions conducted by the accounts of relevant private fund products after the funds were provided by Jinggong Group, which do not constitute shareholder shareholding.

4) The party concerned lacks factual basis for the claims that there is no closing risk, no stock advantage, the price trend of the stock 'Kuaijishan' conforms to the price trend of listed companies in the Huangjiu industry, etc. The claims that Shanghai Taihehui did not demand compensation or supplementation from Jinggong Group, had a bullish view of 'Kuaijishan', buying at no less than the 'latest market fill price' and 'best bid price' do not constitute market manipulation, conform to macro policies, and did not receive abnormal transaction warnings from securities companies, do not affect the determination of market manipulation in this case.

5) The clues of the illegal activities have come into the view of the national public authority, indicating that the illegal activities have been discovered. The bureau found that the discovery of the illegal activities in question did not exceed two years from their termination, so the administrative penalty does not exceed the statute of limitations for accountability.