A few days ago, the State Council issued the "Several Opinions on Strengthening Supervision and Risk Prevention to Promote the High-quality Development of the Capital Market", which is the second time in ten years that the State Council has issued a guiding document on the capital market after the two "National Nine Articles" in 2004 and 2014, which is of great significance for the high-quality development of the mainland capital market at present and in the future. In the third part of the Opinions, "Strict Continuous Supervision of Listed Companies", it is clearly required to strengthen information disclosure and corporate governance supervision, and strictly crack down on market manipulation and other violations of laws and regulations in the name of market value management in accordance with the law. Effective information disclosure is one of the important guarantees for the capital market to give full play to the function of resource allocation, and it is also an important way to protect the legitimate rights and interests of small and medium-sized investors.
In this issue, let's analyze the illegal act of information-based manipulation of the securities market from a typical case
Market manipulation, as a relatively common type of illegal behavior in the capital market, has always been the focus of legislation and justice by artificially influencing market supply and demand forces, destroying the market price formation mechanism, causing the market to "fail" and causing heavy losses to investors. The Securities Law, the Futures and Derivatives Law, the Criminal Law and other laws and regulations clearly stipulate that perpetrators are prohibited from manipulating the securities and futures markets by any means.
From the perspective of manipulation methods, the common market manipulation behaviors can be divided into two categories: transactional manipulation and information-based manipulation, which represent different ways for actors to intervene in the market price formation mechanism. The former is completed through the implementation of transactions, such as using the advantages of funds, positions, etc., to continuously trade or trade between accounts under its actual control to affect the stock price, while the latter is to complete manipulation by publishing information, specifically, it refers to the listed company or the party with the advantage of information through the disclosure and dissemination of information, etc., to transmit untrue, incomplete and untimely trading signals to the market, mislead investors to make investment decisions, make the price of relevant securities change, and affect the trading volume of securities.
Case
On April 9, 2015, Defendant A decided to submit an application to the administrative department for industry and commerce to change the name of Company D to P Financial Information Service Co., Ltd. On April 17, the "Notice of Pre-approval of Enterprise Name Change" issued by the administrative department for industry and commerce was obtained. However, it was not until May 11 that Company D issued the "Announcement on the Change of Company Name" and the "Announcement on Obtaining the Special Authorization of the Domain Name of a Website of the Controlling Shareholder", which stated that based on the needs of business transformation, in order to make the company's name reflect the main business, it planned to change the name to Company P, and through the special authorization of the website domain name, the company could gain a leading competitive advantage in the Internet finance industry. On June 2, Company D officially changed its name to Company P. After the name change, Company P did not carry out the Internet finance business as stated in the announcement, nor did it carry out other financial business other than capital allocation, and the capital allocation business was carried out before the company changed its name. At the same time, from April 30 to May 11, 2015, A purchased 25.2 million shares of Company D through various corporate accounts, personal accounts and trust accounts controlled by A, with a purchase amount of 286 million yuan. On May 11, after the announcement of the name change of Company D, the stock continued to rise by 77.37%.
In the process of changing the name of Company D to Company P, on the one hand, A controlled the generation of Company D's information and the content and timing of information disclosure, such as deciding to initiate the company name change procedure, and at the end of April 2015, Company D held the eighth meeting of the seventh session of the board of directors. At the ninth meeting, Company A neither submitted the name change to the board of directors for deliberation, nor did it inform the other board members of the name change until May 7, when Company D held the tenth meeting of the board of directors, to deliberate and approve the change of enterprise name and business scope; the content of the announcement was also inducing and misleading, depicting the transformation of the company's main business that did not actually exist, and deliberately emphasizing the significance of the company's name change to the company's future development. On the other hand, A took advantage of the gap between the generation of information and the announcement to buy a large number of the company's shares in the secondary market, and his intention to obtain the profit from the stock price increase after the announcement by opening a position in advance was very obvious. In the end, the court found that A had committed the crime of manipulating the securities market, and sentenced him to four years and three months imprisonment and a fine of RMB 11.8 million.
According to the prosecutor
In the above case, by controlling the generation of information of the listed company and the content and timing of information disclosure, and cooperating with its trading behavior in the secondary market, A essentially used information means to artificially influence the stock market price for profit, and had the subjective intention of manipulating the market. It is an important means for information-based securities manipulation crimes for the actual controllers and senior managers of listed companies to take advantage of their special status to cater to market hotspots, control the content, timing and rhythm of information generation or information disclosure, and make misleading disclosures. Its essence is that the actor misleads investors to make investment decisions by controlling publicly disclosed information, distorts the normal formation mechanism of securities prices, and affects the trading price or volume of securities. The actual controllers and senior managers of listed companies are the "key minority" of the capital market, and they have the natural information advantage of "insiders", and their criminal acts of manipulating the market are even more harmful.
The Third Branch of the Municipal People's Procuratorate will continue to crack down on illegal securities activities in accordance with the law, keep a close eye on the "key minority", resolutely punish the "first evil", continue to purify the market ecology, protect the legitimate rights and interests of investors, and provide a solid legal guarantee for the healthy development of the capital market.
Producer: Beijing Municipal Inspection Branch
Contributed by: Pang Yiran, Chen Qiuchen, Seventh Procuratorate Department