Chinanews.com, April 22 (Zhongxin Financial Reporter Li Jinlei) Wang Zelong, the actual controller of the listed company China Nuclear Titanium Dioxide and the post-95 billionaire, carried out private placement arbitrage with the help of two well-known securities firms, CITIC Securities and Haitong Securities, and now the parties involved are facing huge fines.
Fixed increase arbitrage, Wang Zelong was fined about 133 million yuan
According to the announcement recently issued by China Nuclear Titanium Dioxide, on April 19, Wang Zelong, the actual controller of the company, received the "Prior Notice of Administrative Punishment" issued by the China Securities Regulatory Commission.
Previously, Wang Zelong was investigated by the China Securities Regulatory Commission on suspicion of violating restrictive provisions by transferring CNNC's non-public issuance of shares in 2023 and illegal information disclosure. CNNC Titanium Dioxide is a listed company on the Shenzhen Stock Exchange (stock code: 002145) and is a titanium dioxide manufacturer. According to the 2023 annual report of CNNC Titanium Dioxide, Wang Zelong is the largest shareholder of CNNC Titanium Dioxide, holding 33.45% of the shares.
The "Advance Notice of Administrative Punishment" disclosed the details of how Wang Zelong and others set up arbitrage.
CNNC Titanium Dioxide's announcement on the actual controller receiving the prior notice of administrative punishment.
According to the investigation of the China Securities Regulatory Commission, in July 2022, the application for the non-public issuance of A-shares by CNNC titanium dioxide was approved by the Issuance Examination Committee of the China Securities Regulatory Commission. From July to August 2022, CITIC CSI recommended a long-short plan to Wang Zelong, the actual controller of CNNC Titanium Dioxide.
According to the plan, "customers can directly realize fixed and short arbitrage through the OTC derivatives trading desk, settle the income in advance, and do not need to wait for a six-month lock-up period, and usually take more than a month to withdraw funds and income".
In September 2022, Wang Zelong decided to implement private placement arbitrage, lend securities through CNNC's titanium dioxide employee stock ownership plan, and carry out over-the-counter derivatives trading with CITIC CSI in the name of an investment company. Han Yuchen specifically implements the arbitrage plan and is responsible for connecting with CITIC CSI and CITIC Securities.
Subsequently, the relevant operations were carried out one after another. Due to the insufficient subscription funds of an investment company, in order to use up the quota of securities lending, Wang Zelong contacted and suggested that his friend Hong Haowei join the arbitrage through Fund 1.
In the end, Wang Zelong made an actual profit of more than 58.16 million yuan through an investment company, Hong Haowei and Wang Zelong made an actual profit of more than 14.19 million yuan and 2.47 million yuan respectively through Fund 1, CITIC CSI did not make an actual profit, CITIC Securities securities lending business income exceeded 1.91 million yuan, and Haitong Securities income from income swap business was 789,000 yuan.
According to the facts, nature, circumstances and degree of social harm of the parties' illegal acts, the CSRC intends to issue a series of fines.
Among them, Wang Zelong was confiscated of illegal gains and fines totaling about 133 million yuan. This post-95 tycoon will pay a heavy price for his illegal behavior.
CNNC Titanium Dioxide 2023 Annual Report.
According to public information, in 2019, Wang Zelong spent more than 1.6 billion yuan to become the controlling shareholder and actual controller of the company. At that time, "post-95 generation into A-share listed companies" attracted market attention.
According to Forbes China, Wang Zelong was born in a chemical family, and his father Wang Deliang was engaged in chemical trade in his early years and dug the first pot of gold. In 2015, Wang Zelong and his father participated in the merger and reorganization project of Baililian's "snake swallowing elephant" Lomon Titanium Industry.
According to Hurun Report, in 2017, Wang Zelong, who was only 21 years old, was listed for the first time on the "2017 Hurun Report" because of his holding of Lomon Baili's equity, ranking 1214th on the list with a wealth of 3.5 billion yuan.
According to the 2023 annual report of CNNC Titanium Dioxide, the company achieved operating income of 4.947 billion yuan, a year-on-year decrease of 9.76%, and a net profit of 419 million yuan, a year-on-year decrease of 34.84%.
In the secondary market, the share price of CNNC titanium dioxide has been falling and falling since reaching a high of 14.1 yuan in 2021, and is currently hovering at the 4 yuan mark, down about 70% from the high point in 2021.
CITIC Securities and Haitong Securities were fined
In this hidden capital operation, CITIC Securities and Haitong Securities could not escape their involvement. On April 19, the two brokerages announced that they had also received the "Advance Notice of Administrative Punishment" issued by the China Securities Regulatory Commission.
CITIC Securities and its wholly-owned grandsons, CITIC CSI, and Haitong Securities played an important role in this incident.
The China Securities Regulatory Commission (CSRC) believes that CITIC CSI formulated an arbitrage plan, built a trading structure, and provided leveraged financial support for Wang Zelong and Hong Haowei's transfer of shares in violation of restrictive regulations; CITIC Securities knew that the purpose of securities lending was to provide securities lending services to the customer, and cooperated with them to provide securities lending services; Haitong Securities subscribed for the non-public issuance of shares of CNNC Titanium Dioxide in accordance with the quotation instructions of CITIC CSI in its own name, which objectively helped CITIC CSI and its customers obtain stock returns, so that the private placement arbitrage behavior could be realized.
On the whole, CITIC CSI was fined 46.5 million yuan, CITIC Securities was fined about 25.16 million yuan, and Haitong Securities was fined about 7.76 million yuan.
Regarding the problems and penalties identified in the above-mentioned "Advance Notice of Administrative Punishment", CITIC Securities said that the company and its grandson company CITIC Securities Capital sincerely accept the punishment, and will deeply reflect on it, conscientiously implement rectification, further improve ideological understanding, actively implement regulatory requirements, draw inferences from one another, and comprehensively and systematically investigate the shortcomings of various business management.
Haitong Securities said that the company sincerely accepts the punishment, and will deeply reflect on it, learn lessons, conscientiously implement various rectification requirements, further optimize the compliance internal control mechanism, continuously improve the awareness and level of standardized operation, insist on drawing inferences from one example, comply with laws and regulations, and steadily and prudently promote the company's various businesses. (ENDS)