① The Shanghai Securities Regulatory Bureau recently disclosed that private equity investment manager Gong某某 was penalized for leaking undisclosed information; ② On July 14 this year, the bureau simultaneously penalized three private equity investment managers, all for information leakage; ③ The entities violating private equity regulations have expanded from traditional investment research roles to non-investment research roles and associated parties such as branches and technology companies.
Cailian Press, December 14 (reported by Feng Qijuan) As regulatory penalties are gradually disclosed, incidents of private equity information leaks have become frequent. Coupled with new risk control challenges brought about by digital transformation, the industry’s risk control deficiencies have become increasingly prominent.
The Shanghai Securities Regulatory Bureau recently disclosed that in response to Gong某某's violation of leaking undisclosed information, the bureau ordered rectification, issued a warning, and imposed a fine of 200,000 yuan.
The penalty notice shows that Gong某某 previously worked at a securities-focused private equity firm, serving as the investment manager for five private equity products and being responsible for and aware of investment decision-making tasks. During his tenure, Gong某某 leaked the investment decisions and other undisclosed information of the aforementioned five private equity funds to Zhao某 through face-to-face communication, WeChat, and providing account credentials of related private equity fund securities accounts.
In recent years, multiple penalty notices from the Shanghai Securities Regulatory Bureau indicate that private equity investment managers have become a high-risk group for information leakage. In July this year, the bureau issued penalty notices for information leakage behaviors of three private equity investment managers simultaneously, each fined 500,000 yuan.
In addition to information leakage, cases where investment research personnel use undisclosed information for synchronized trading are also frequent, with numerous related examples.
As the asset management industry deepens its digital transformation, the subjects of information leakage and unauthorized trading are expanding from core investment research roles such as fund managers to IT, risk control, and operations roles that can access core data. These roles, due to their system privileges, often involve larger amounts of money in violations and exhibit greater concealment.
Notably, non-investment research personnel within private equity firms and their affiliates may become “intermediary hubs” for the leakage of undisclosed information. Although they do not directly participate in fund investment decisions, they legitimately access core undisclosed information such as private equity product holdings, trading records, and investment strategies based on their job functions.
A private equity professional in Shanghai pointed out that compared to direct information leakage by investment research roles, the “intermediary transmission” risks posed by non-investment research roles are more difficult to control, summarized in three reasons: First, non-investment research roles are distributed across multiple links such as branches, IT companies, and risk control, which are traditional blind spots for regulators and institutional risk controls; Second, information transmission chains involve multiple intermediate steps, making tracing and evidence collection extremely challenging; Third, risks easily spread across institutions—for example, information leakage by brokerage IT personnel may affect multiple cooperating private equity firms, ultimately disrupting the fairness of capital markets and harming the interests of ordinary investors.
In this regard, another industry insider emphasized that private equity institutions must establish strict information firewall systems, clearly delineating the scope of individuals authorized to access core information. Through technical measures such as physical isolation, network permission control, and system log monitoring, ensure the principle of “minimum authorization” is implemented. For access requests from affiliated parties, higher-level approvals and monitoring should be enforced.
Multiple private equity investment managers penalized for information leakage
On July 14 this year, the Shanghai Securities Regulatory Bureau issued administrative penalty decisions to three private equity investment managers. Due to the anonymity of key information such as private equity institutions, private equity products, and fund managers, it is temporarily impossible to verify whether the three investment managers are from the same private equity firm.
The penalty notice stated that for leaking undisclosed information obtained through their positions, Zhang Moufan, Chen Mou, and Xu Mou were ordered by the bureau to make corrections and fined RMB 500,000 each. Among them, although Chen Mou and Xu Mou submitted statements and defense materials, they did not raise objections regarding the illegal facts, legal application, or penalty discretion in this case.
The Shanghai Securities Regulatory Bureau pointed out that Zhang Moufan once served as the investment manager of a securities-type fund under a certain private equity firm in Shanghai, responsible for investment decision-making and aware of undisclosed information. During his tenure, Zhang Moufan leaked undisclosed information, such as investment decisions of the managed product, to external parties.
During his tenure at a private equity firm in Shanghai, Chen Mou served as the investment manager of X private equity funds, responsible for investment decision-making and aware of undisclosed information such as investment decisions. During his term, Chen Mou leaked undisclosed information, such as investment decisions of the managed private equity funds, to external parties.
Xu Mou has worked at two private equity institutions, serving as the designated authorized representative of an advisory product under a certain asset management company in Shanghai, as well as the investment manager of a securities-type private equity product under a certain asset management center (limited partnership) in Shanghai, actually responsible for investment decision-making and aware of undisclosed information. During his tenure, Xu Mou leaked undisclosed information, such as investment decisions of the aforementioned two products, to external parties.
Aside from information leaks, insiders within private equity firms often use their positions to profit from trading based on undisclosed information.
In March last year, Le Mou, an investment manager of Shanghai Bei Mou Investment Management Co., Ltd., was ordered by the Shanghai Securities Regulatory Bureau to correct his actions, confiscate illegal gains of RMB 300,700, and impose an equivalent fine, totaling RMB 601,400 in penalties for trading using undisclosed information. Based on related clues, Shanghai Bei Mou generally refers to Shanghai Bei Yi Investment Management Co., Ltd., and Le Mou refers to Le Qi.
Tracing back, Le Qi had similar operations during his time in public offerings. A December 2021 penalty notice from the Shanghai Securities Regulatory Bureau pointed out that Le Mou, then a fund manager at Shangtou Morgan, was also penalized for profiting from trading based on undisclosed information, with illegal gains of RMB 1,653,700 confiscated and an equivalent fine imposed.
In May of the same year, a penalty notice from the Shenzhen Securities Regulatory Bureau indicated that Li Lingyun, the investment director of Yino Investment, used undisclosed information to trade stocks. In addition to being ordered to correct his actions, he was also fined an amount equivalent to the confiscated illegal gains of RMB 3,265,400.
In recent years, regulatory bodies ranging from local securities regulators to the China Securities Regulatory Commission (CSRC) have continuously intensified penalties for private equity professionals involved in information leakage and illegal trading.
In April last year, Hu Xiaoqi, the actual controller of Shanghai Pudao Ruifu, was ordered by the CSRC to rectify his actions, confiscate illegal gains amounting to RMB 24.3957 million, and pay an equivalent fine, resulting in a total penalty of RMB 48.7915 million for trading stocks using undisclosed information.
Less than half a year later, Tu Erfan was also ordered by the CSRC to rectify his actions, with illegal gains of RMB 33.2584 million confiscated and an equivalent fine imposed, totaling RMB 66.5169 million in penalties. Given the severity of the violations, the CSRC also decided to impose a six-year ban from the securities market on Tu Erfan.
Since August 2018, Tu Erfan has served as the legal representative, executive director, and general manager of Haiya Jinkong, gaining access to undisclosed information such as the company’s product holdings and investment decision-making information.
IT departments and brokerage affiliates of private equity firms have become channels for information leaks.
Against the backdrop of digital transformation in the asset management industry, new blind spots in risk control have been exposed. Non-traditional investment roles, such as IT personnel with access to core information, are rapidly becoming violators, expanding beyond traditional core research and investment positions like fund managers.
In November this year, Lin Yiping, an IT professional in a private equity firm, was ordered by the Zhejiang Securities Regulatory Bureau to rectify his actions, issued a warning, had illegal gains of RMB 88.5768 million confiscated, and was fined an equivalent amount, resulting in a total penalty of RMB 177 million. In light of the severity of the violations, the bureau also imposed a five-year ban from the securities market on Lin Yiping.
The penalty notice revealed that Lin Yiping previously worked for Hangzhou XX Technology Co., Ltd. (hereinafter referred to as “XX Technology”), where he was responsible for front-end development of trading strategies, product risk control, and some product trading testing, decision-making, order placement, and monitoring tasks, essentially performing duties typical of private equity fund practitioners. Notably, the company, along with two private equity institutions within Zhejiang Province, were controlled by the same actual controller and managed by the same management team, with internal controls and personnel management uniformly constrained across the three entities.
From October 2022 to September 2023, during his tenure at XX Technology, Lin Yiping not only accessed and queried undisclosed information related to the two aforementioned private equity institutions due to his job responsibilities but also directly obtained and processed relevant undisclosed information.
Lin Yiping is not an isolated case of IT personnel being penalized for trading stocks using undisclosed information. At the end of May this year, securities regulatory bureaus in Anhui and Jilin provinces both penalized IT personnel from brokerages for trading using undisclosed information.
Notably, the leakage of non-investment research information also follows an 'intermediary transmission' pathway. Certain affiliates such as brokerage branches and technology companies associated with private equity institutions have vulnerabilities in information control, potentially becoming channels for information leaks.
Li Haipeng, former senior manager of the Information Technology Center at CITIC Securities, was fined by the Anhui Securities Regulatory Bureau for trading based on undisclosed information. Illegal gains of RMB 2.1314 million were confiscated, and a penalty of RMB 2.1314 million was imposed, totaling RMB 4.2627 million.
Starting from December 2018, Li Haipeng gained access to the CRM system application development role at CITIC Securities, enabling him to obtain undisclosed information on all CITIC Securities clients, including account details, asset size, trading positions, and more. During his tenure, Li Haipeng used the CRM system to acquire undisclosed information about the holdings, orders, and daily transaction records of Gao's fund.
During the period in question, the group of accounts controlled by Li Haipeng traded a total of 128 stocks, with a cumulative trading amount of RMB 64.838 million. Among these, there were 76 stocks that showed conformity with Gao's Ruiyuan Fund, involving a conforming trading amount of RMB 29.0038 million and generating conforming profits of RMB 2.1314 million.
Similar cases include Zhou Jingjie, the former general manager of a Guotai Junan branch, who was fined RMB 530,000 by the Guangxi Securities Regulatory Bureau in February last year for using undisclosed information obtained through his position to hint at others to engage in relevant securities transactions and illegally trade stocks.
During his tenure, Zhou Jingjie had the authority to view undisclosed information such as trading and holdings of securities accounts for 17 private equity fund products, including 'Juming Gaoshan No. 1,' opened at the branch. Starting from December 2019, Zhou Jingjie, at Gao’s request, repeatedly provided Gao with irregular updates on the transaction information of the aforementioned private equity products, hinting at Gao to engage in related trading activities until his departure.
