Zijiang Enterprise Spins Off New Materials Listed involved in insider trading Former supervisor Chen Hu was fined

Source: China Economic Network

China Economic Network Beijing, August 10, 2019 China Securities Regulatory Commission website recently published the China Securities Regulatory Commission Tianjin Regulatory Bureau Administrative Penalty Decision ([2021] No. 1) shows that in late December 2019, Shanghai Zijiang Enterprise Group Co., Ltd. (hereinafter referred to as "Zijiang Enterprise", 600210.SH) General Manager Guo Mou, Financial Director Qin Mouyu, Board Secretary Gao Mou and Shanghai Zijiang New Material Technology Co., Ltd. (hereinafter referred to as "Zijiang New Materials") Senior management He Mouzhong and others had discussed the spin-off and listing of Zijiang New Materials, and arranged for Gao to consult an intermediary such as Essence Securities Co., Ltd. (hereinafter referred to as "Essence Securities") on this matter.

On February 17, 2020, Gan Moujing, the representative of Zijiang Enterprise Securities Affairs, issued a notice to all directors of Zijiang Enterprise to convene the 15th meeting of the 7th Board of Directors by e-mail and paper documents, and a notice of convening the 12th meeting of the 7th Board of Supervisors to all supervisors by e-mail.

On February 20, 2020, Zijiang Enterprise held a board meeting and a meeting of the board of supervisors through communication, and deliberated on the matter of spin-off subsidiary Zijiang New Materials to be listed on the Science and Technology Innovation Board. On February 21, 2020, Zijiang Enterprise announced the above-mentioned resolutions of the board of directors and the board of supervisors, and the preliminary plan for spin-off and listing.

Zijiang Enterprise's intention to spin off its subsidiary, Zijiang New Materials, for listing on the Science and Technology Innovation Board constitutes the circumstances under which information should be disclosed as stipulated in the Several Provisions on the Pilot Domestic Listing of Subsidiaries of Listed Companies (CSRC Announcement [2019] No. 27), which is a major event stipulated in Article 67, Paragraph 2, Item 12 of the Securities Law of 2005, and the information was inside information as stipulated in Article 75, Paragraph 2, Item 1 of the Securities Law of 2005 before it was disclosed. Inside information was formed no later than January 2, 2020 and made public on February 21, 2020.

At 9:35 on February 17, 2020, Gan Moujing sent a notice to all supervisors by email to convene the twelfth meeting of the seventh session of the Board of Supervisors; at 11:38, Chen Hu, then supervisor of Zijiang Enterprise, sent a WeChat message to Gan Moujing saying "Can you not send a compressed file Thank you" "My mobile phone cannot be opened", Gan Moujing immediately sent the word version of the relevant meeting document to Chen Hu again through WeChat, and Chen Hu Replied on WeChat "Receive thank you!" ”。 Chen Hu, as a supervisor of Zijiang Enterprise, is an insider of the inside information, and his knowledge of the inside information is no later than 11:38 a.m. on February 17, 2020.

Chen Hu had a close relationship with Wu Rongguang and had WeChat contacts during the sensitive period of insider information. Chen Hu and Wu Rongguang once worked in Shanghai Zijiang (Group) Co., Ltd., which belonged to the relationship of old colleagues and friends, and the two mainly contacted through WeChat. At 12:31 on February 17, 2020, Chen Hu and Wu Rongguang talked through WeChat voice for 8 minutes and 52 seconds; on February 17, 2020, at 13:15, Chen Hu and Wu Rongguang talked through WeChat voice for 1 minute and 10 seconds.

During the sensitive period of insider information, on February 17, 18 and 19, 2020, Chen Hu transferred 850,000 yuan, 250,000 yuan and 500,000 yuan to the tripartite depository account of bank of China corresponding to the "Wu Rongguang" securities account, with a total of 1.6 million yuan, and after arriving, Wu Rongguang transferred it to his securities fund account. Wu Rongguang transferred the above three funds provided by Chen Hu to the securities fund account and then bought "Zijiang Enterprise", and bought a total of 439,700 shares on February 17, 18 and 19, 2020, with a transaction amount of 1.5983 million yuan. On February 25, the securities account of "Wu Rongguang" sold all 611,000 shares of "Zijiang Enterprise" and sold a transaction amount of 3,042,800 yuan, including the above 439,700 shares purchased during the sensitive period of insider information, and the corresponding profit of this part of the stock was 587,900 yuan (after deducting taxes).

From March 2, 2020 to March 3, 2020, Wu Rongguang transferred 2.1578 million yuan from wu rongguang's securities account to his tripartite depository account of China Merchants Bank, and transferred 1.6 million yuan of it directly to Chen Hu, and 557,800 yuan to Chen Hu through the china merchant bank account of his father Wu Mouou.

During the sensitive period of insider information, in addition to using the "Wu Rongguang" securities account with Chen Hu to insider trading "Zijiang Enterprise" shares, Wu Rongguang also sold other stocks to raise funds to trade "Zijiang Enterprise" shares. From February 17, 2020 to February 20, 2020, the securities account of "Wu Rongguang" sold a total of 7,000 shares of "Ping An Bank", with a transaction amount of 106,500 yuan, sold 34,300 shares of "Lucky New Materials", sold a transaction amount of 519,900 yuan, bought "Zijiang Enterprise" after selling the above stocks, and bought a total of 171,300 shares of "Zijiang Enterprise" from February 17 to February 20, with a transaction amount of 627,300 yuan. On February 25, the securities account of "Wu Rongguang" sold all 611,000 shares of "Zijiang Enterprise" and sold a transaction amount of 3,042,800 yuan, including the above 171,300 shares purchased during the sensitive period of insider information, and the corresponding profit of this part of the stock was 224,400 yuan (after deducting taxes).

In summary, during the sensitive period of insider information, Wu Rongguang and Chen Hu, the insider of the insider information, had WeChat contacts, and Chen Hu, the insider of the insider information, provided funds, Wu Rongguang operated the "Wu Rongguang" securities account, the behavior of the two people trading the shares of "Zijiang Enterprise" was obviously abnormal, the trading activities were highly consistent with the insider information, and the two could not make reasonable explanations.

Based on the facts, nature, circumstances and degree of social harm of the parties' illegal acts, and in accordance with the provisions of Article 202 of the 2005 Securities Law, the Tianjin Securities Regulatory Bureau intends to decide: 1. Confiscate the illegal gains of Chen Hu and Wu Rongguang of 587,900 yuan, impose a fine of 1,587,400 yuan on Chen Hu and 176,400 yuan on Wu Rongguang for the joint insider trading behavior, and impose a fine of 176,400 yuan on Wu Rongguang; Wu Rongguang was confiscated 224,400 yuan of illegal gains and fined 224,400 yuan.

According to the Tianyancha APP, Shanghai Zijiang Enterprise Group Co., Ltd. is a new material packaging enterprise invested and controlled by Shanghai Zijiang (Group) Co., Ltd. In 1999, it successfully issued shares and listed on the Shanghai Stock Exchange. Zijiang Enterprise is the largest shareholder of Zijiang New Materials, holding 63% of the shares.

The party, Chen Hu, served as a supervisor of Zijiang Enterprise from June 26, 2017 to July 23, 2020.

On February 21, 2020, Zijiang Enterprises issued a preliminary plan for the spin-off of its subsidiary, Shanghai Zijiang New Material Technology Co., Ltd., to be listed on the Science and Technology Innovation Board. Zijiang Enterprise intends to spin off its holding subsidiary, Zijiang New Materials, to be listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange, and will start the introduction of strategic investors in Zijiang New Materials. After the completion of the spin-off, the shareholding structure of Zijiang Enterprise will not change, and the control of Zijiang New Materials will remain.

Article 67 of the Securities Law stipulates that when a major event occurs that may have a greater impact on the trading price of the listed company's stock, and investors have not yet learned of it, the listed company shall immediately submit an interim report on the situation of the major event to the securities regulatory authority under the State Council and the stock exchange, and make an announcement explaining the cause, current status and possible legal consequences of the event. The following circumstances are major events as referred to in the preceding paragraph:

(1) Major changes in the company's business policy and business scope;

(2) the company's major investment behavior and major decisions on the acquisition of property;

(3) the conclusion of important contracts by the company may have a significant impact on the company's assets, liabilities, equity and operating results;

(4) The default of the company in incurring major debts and failing to pay off major debts as they become due;

(5) The company incurred major losses or major losses;

(6) Major changes in the external conditions of the company's production and operation;

(7) There is a change in the directors, more than one-third of the supervisors or managers of the company;

(8) Shareholders or actual controllers who hold more than 5% of the company's shares, and the circumstances in which they hold shares or control the company have undergone a major change;

(9) Decisions on capital reduction, merger, division, dissolution and bankruptcy application of the company;

(10) Major litigation involving the company, where the resolutions of the shareholders' general meeting and the board of directors are revoked or declared invalid in accordance with law;

(11) The company is suspected of committing a crime and is investigated by the judicial organs, and the directors, supervisors and senior management personnel of the company are suspected of committing crimes and are taken compulsory measures by the judicial organs;

(12) Other matters prescribed by the securities regulatory authority under the State Council.

Article 73 of the Securities Law prohibits insiders of securities transactions and persons who illegally obtain insider information from using insider information to engage in securities trading activities.

Article 75 of the Securities Law stipulates that information that has not yet been disclosed in securities trading activities that involves the company's operations, finances or has a significant impact on the market price of the company's securities is inside information. The following information is inside information:

(1) Major events listed in the second paragraph of Article 67 of this Law;

(2) the company's plan to distribute dividends or increase capital;

(3) major changes in the company's shareholding structure;

(4) Major changes in the company's debt guarantee;

(5) Mortgage, sell or scrap more than 30% of the company's main assets for business purposes at one time;

(6) The acts of the company's directors, supervisors and senior management personnel may bear the liability for compensation for major damages in accordance with law;

(7) Relevant plans for acquisitions by listed companies;

(8) Other important information determined by the securities regulatory authority under the State Council that has a significant impact on the trading price of securities.

Article 76 of the Securities Law stipulates that insiders of securities transactions and persons who illegally obtain insider information shall not buy or sell the company's securities, or disclose the information, or advise others to buy or sell the securities before the insider information is made public. Where natural persons, legal persons or other organizations that hold or jointly hold more than 5% of the shares of a company with others through agreements or other arrangements acquire shares of a listed company, otherwise provided for in this Law, those provisions shall apply.

Where insider trading causes losses to investors, the actor shall bear the liability for compensation in accordance with law.

Article 202 of the Securities Law stipulates that if a person who is in the possession of insider information in a securities transaction or a person who illegally obtains the insider information buys or sells the securities, or discloses the information, or suggests that others buy or sell the securities, before the issuance, trading or other information involving the issuance, trading or other information that has a major impact on the price of the securities is made public, he shall be ordered to dispose of the illegally held securities in accordance with the law, confiscate the illegal gains, and impose a fine of not less than one time but not more than five times the illegal gains; A fine of between 30,000 and 600,000 yuan shall be imposed. Where a unit engages in insider trading, it shall also give a warning to the directly responsible supervisors and other directly responsible personnel, and impose a fine of between 30,000 and 300,000 yuan. Where the staff of the securities regulatory authority engages in insider trading, a heavier punishment shall be imposed.

The following is the original text:

Tianjin Regulatory Bureau of China Securities Regulatory Commission

Administrative Penalty Decision

[2021] No. 1

Party: Chen Hu, male, born in July 1974, was a supervisor of Shanghai Zijiang Enterprise Group Co., Ltd. (hereinafter referred to as "Zijiang Enterprise"), and his ID address was Changning District, Shanghai.

Wu Rongguang, male, born in June 1973, ID address: Minhang District, Shanghai.

In accordance with the relevant provisions of the Securities Law of the People's Republic of China (hereinafter referred to as the 2005 Securities Law), which was amended in 2005, our bureau conducted a case investigation and trial of Chen Hu and Wu Rongguang's insider trading in the shares of "Zijiang Enterprise", and twice informed the parties of the facts, reasons, and basis for the administrative punishment and the rights enjoyed by the parties in accordance with the law. The parties submitted written statements and defense opinions twice, and did not request a hearing. The case has now been investigated and the trial has been concluded.

After investigation, the relevant facts of Chen Hu and Wu Rongguang's illegal acts are as follows:

1. Formation and disclosure of inside information

In late December 2019, Guo Mou, general manager of Zijiang Enterprise, Qin Mouyu, financial director, Gao Mou, secretary of the board of directors, and He Mouzhong, senior manager of Shanghai Zijiang New Materials Technology Co., Ltd. (hereinafter referred to as "Zijiang New Materials"), discussed the spin-off and listing of Zijiang New Materials, and arranged for Gao to consult Anxin Securities Co., Ltd. (hereinafter referred to as "Anxin Securities") and other intermediary institutions on this matter.

On January 2, 2020, Essence Securities delivered the "Proposal on the Listing of the Spin-off Subsidiary of Shanghai Zijiang Enterprise Group Co., Ltd." to Zijiang Enterprise.

On February 12, 2020, Essence Securities sent the electronic version of the spin-off listing plan to Gao.

On February 14, 2020, the Investor Relations Department of Zijiang Enterprise submitted application documents to Chairman Shen Mou, proposing to convene the board of directors to discuss matters related to the spin-off and listing.

On February 20, 2020, Zijiang Enterprise held a board meeting and a meeting of the board of supervisors through communication, and deliberated on the matter of spin-off subsidiary Zijiang New Materials to be listed on the Science and Technology Innovation Board.

On February 21, 2020, Zijiang Enterprise announced the above-mentioned resolutions of the board of directors and the board of supervisors, and the preliminary plan for spin-off and listing.

2. Chen Hu is aware of the inside information

3. The securities account of "Wu Rongguang" is controlled by Wu Rongguang himself

The "Wu Rongguang" securities account was opened on February 27, 2007 at the Caobao Road Sales Office of China Galaxy Securities in Shanghai, and was controlled and operated by Wu Rongguang himself. From February 17 to February 25, 2020, Wu Rongguang used his mobile phone to operate the "Wu Rongguang" securities account to buy and sell "Zijiang Enterprise" stocks, placing an order with a mobile phone number of 136×××818.

4. Chen Hu and Wu Rongguang had a close relationship and had WeChat contacts during the sensitive period of inside information

Chen Hu and Wu Rongguang once worked in Shanghai Zijiang (Group) Co., Ltd., which belonged to the relationship of old colleagues and friends, and the two mainly contacted through WeChat. At 12:31 on February 17, 2020, Chen Hu and Wu Rongguang talked through WeChat voice for 8 minutes and 52 seconds; on February 17, 2020, at 13:15, Chen Hu and Wu Rongguang talked through WeChat voice for 1 minute and 10 seconds.

5. Chen Hu and Wu Rongguang jointly engaged in insider trading in "Zijiang Enterprise" shares

(1) Chen Hu provided funds of 1,600,000 yuan.

During the sensitive period of insider information, on February 17, 18 and 19, 2020, Chen Hu transferred 850,000 yuan, 250,000 yuan and 500,000 yuan to the tripartite depository account of bank of China corresponding to the securities account of "Wu Rongguang", with a total of 1,600,000 yuan, and after arriving, Wu Rongguang transferred them to his securities fund account.

(2) Wu Rongguang operates the "Wu Rongguang" securities account to trade "Zijiang Enterprise" stocks.

Wu Rongguang transferred the above three funds provided by Chen Hu to the securities fund account and then bought "Zijiang Enterprise", and on February 17, 18 and 19, 2020, a total of 439,700 shares were purchased, with a transaction amount of 1,598,348 yuan. On February 25, the securities account of "Wu Rongguang" sold all 611,000 shares of "Zijiang Enterprise" and sold a transaction amount of 3,042,780 yuan, including the above 439,700 shares purchased during the sensitive period of insider information, and the corresponding profit of this part of the stock was 587,918.24 yuan (after deducting taxes).

From March 2, 2020 to March 3, 2020, Wu Rongguang transferred RMB2,157,800 from Wu Rongguang's securities account to his Tripartite Depository Account of China Merchants Bank, and transferred RMB1,600,000 of it directly to Chen Hu and RMB557,785 to Chen Hu through his father Wu Mou'ou's China Merchants Bank account.

(3) The above-mentioned transaction of "Zijiang Enterprise" stock in the "Wu Rongguang" securities account is obviously abnormal, which is highly consistent with the inside information.

First, chen hu and Wu Rongguang's contact time, capital change time, and transaction time are basically the same as the change of insider information and the time of disclosure. At 11:38 on February 17, 2020, Chen Hu learned of the inside information of the case, at 12:31 and 13:15 Chen Hu and Wu Rongguang WeChat voice call, on February 17, 18 and 19, Chen Hu transferred three funds totaling 1,600,000 yuan to Wu Rongguang, and after arriving at the account, wu Rongguang used to buy "Zijiang Enterprise" shares. At 9:25 on February 25, Chen Hu and Wu Rongguang had a WeChat voice call, and at 9:35 a.m., the "Wu Rongguang" securities account sold all the shares of "Zijiang Enterprise". From 10:24 to 10:40 on March 2, Chen Hu and Wu Rongguang contacted Wu Rongguang several times on WeChat, and then from March 2 to March 3, Wu Rongguang transferred RMB1,600,000 and RMB557,785 directly or indirectly to Chen Hu. Second, buying "Zijiang Enterprise" stock is obviously different from the usual trading habits. During the sensitive period of insider information, the securities account of "Wu Rongguang" transferred 1,600,000 yuan and bought the shares of "Zijiang Enterprise" in a single item, and the transaction amount was significantly enlarged compared with before the sensitive period of insider information.

In summary, during the sensitive period of insider information, Chen Hu, the insider of the insider information, provided funds, Wu Rongguang operated the "Wu Rongguang" securities account, and the behavior of the two people jointly trading the shares of "Zijiang Enterprise" was obviously abnormal, the trading activities were highly consistent with the inside information, and the two could not make reasonable explanations.

6. Wu Rongguang insider trading in "Zijiang Enterprise" shares

(1) Wu Rongguang sold other stocks in the "Wu Rongguang" securities account to trade "Zijiang Enterprise" shares.

During the sensitive period of insider information, in addition to using the "Wu Rongguang" securities account with Chen Hu to insider trading "Zijiang Enterprise" shares, Wu Rongguang also sold other stocks to raise funds to trade "Zijiang Enterprise" shares. From February 17, 2020 to February 20, 2020, the securities account of "Wu Rongguang" sold a total of 7,000 shares of "Ping An Bank", with a transaction amount of 106,540 yuan, sold 34,300 shares of "Lucky New Materials", sold a transaction amount of 519,905.5 yuan, bought "Zijiang Enterprise" after selling the above stocks, and bought a total of 171,300 shares of "Zijiang Enterprise" from February 17 to February 20, with a transaction amount of 627,331 yuan. On February 25, the securities account of "Wu Rongguang" sold all 611,000 shares of "Zijiang Enterprise" and sold a transaction amount of 3,042,780 yuan, including the above 171,300 shares purchased during the sensitive period of insider information, and the corresponding profit of this part of the stock was 224,401.39 yuan (after deducting taxes).

(2) The above-mentioned transaction of "Zijiang Enterprise" stock in the "Wu Rongguang" securities account is obviously abnormal, which is highly consistent with the inside information.

First, chen hu and Wu Rongguang's contact time, capital change time, and transaction time are basically the same as the change of insider information and the time of disclosure. At 12:31 and 13:15 on February 17, 2020, Chen Hu, the insider of the inside information, and Wu Rongguang had a WeChat voice call, and then from February 17 to February 20, the securities account of "Wu Rongguang" sold "Ping An Bank" and "Lucky New Materials" continuously, and bought "Zijiang Enterprise" after selling. At 9:25 on February 25, Chen Hu and Wu Rongguang had a WeChat voice call, and at 9:35 a.m., the "Wu Rongguang" securities account sold all the shares of "Zijiang Enterprise". Second, buying "Zijiang Enterprise" stock is obviously different from the usual trading habits. During the sensitive period of insider information, the "Wu Rongguang" securities account continued to sell other stocks to raise funds, and bought the shares of "Zijiang Enterprise" in a single item, and the transaction amount was significantly enlarged compared with before the sensitive period of insider information.

In summary, during the sensitive period of insider information, Wu Rongguang and Chen Hu, the insider of the insider information, had WeChat contacts, the trading behavior was obviously abnormal, the trading activities were highly consistent with the insider information, and Wu Rongguang could not make reasonable explanations.

The above facts are proved by evidence such as relevant meeting materials and announcements of Zijiang Enterprise, records of inquiries and WeChat chat records of relevant personnel, relevant securities account information and transaction flows, relevant bank account information and transfer records, and calculation data of the Shanghai Stock Exchange.

Our bureau believes that during the sensitive period of insider information, Chen Hu and Wu Rongguang's joint trading and Wu Rongguang's trading of "Zijiang Enterprise" shares violated the provisions of Article 73 and Article 76, Paragraph 1 of the 2005 Securities Law, and constituted insider trading as described in Article 202 of the Securities Law of 2005.

In his defense materials, the party Chen Hu proposed that, first, it was found that the time of his knowledge of the inside information was not later than 11:38 a.m. on February 17, 2020, and the time of his knowledge should be no later than 0:00 a.m. on February 18, 2020; second, combined with the context of the WeChat record, his contact with Wu Rongguang was normal, reasonable and explainable, there was no abnormality, and it could not be inferred that the contact between the two was highly consistent with the trading behavior related to the "Wu Rongguang" securities account Third, the transfer of large amounts of funds between Wu Rongguang and Wu Rongguang is a normal fund loan, and the excess income after Wu Rongguang's repayment after excluding the principal and loan proceeds is the consideration for the 67% equity transfer of Shanghai Zhaoheng Intelligent Technology Co., Ltd. (hereinafter referred to as "Zhaoheng Technology"), which cannot be determined to have participated in the investment decision of the "Wu Rongguang" securities account; fourth, the calculation standards and methods of illegal income are not clear, and the amount of punishment is inaccurate and excessive, please consider the parties to cooperate with the investigation to adopt appropriate administrative penalties. In summary, it is requested to waive or mitigate or mitigate the punishment.

In his defense materials, the party Wu Rongguang proposed that, first, he deduced the possibility and feasibility of the spin-off and listing of Zijiang New Materials based on his own work, professional experience and open market information; second, the trading behavior of the "Zijiang Enterprise" stock in the securities account of "Wu Rongguang" was not abnormal, in line with his daily investment experience and trading logic, and was not highly consistent with the inside information, and at that time, the market value of the stocks held in his margin account was about 13 million, and there was a net amount of more than 8 million yuan, and his transaction "Zijiang Enterprise" was not abnormal. Stock funds account for a small proportion of his own investable amount; the third is that its large amount of funds transfer with Chen Hu is a normal capital loan, February 17, 2020 at 13:00 WeChat voice content to remind Chen Hu to agree to the transfer request of the loan years ago, in addition to returning the 1.6 million yuan loan, at the same time transferred the relevant investment profits to Chen Hu, purely to thank Chen Hu for his help over the years, and then Chen Hu also transferred 67% of the equity of Zhaoheng Technology to himself free of charge Fourth, the calculation standard of illegal income is inaccurate and the punishment is too heavy. In summary, it is requested to waive or mitigate or mitigate the punishment.

Upon review, our bureau believes that:

First, about the time when Chen Hu knew the inside information. Chen Hu argued that the time at which he learned the inside information was inaccurate and that the time of his knowledge should be no later than 00:00 on February 18, 2020. The evidence shows that at 9:35 on February 17, 2020, Gan Moujing, the representative of Zijiang Enterprise Securities, sent a notice to all supervisors, including Chen Hu, of the twelfth meeting of the Seventh Supervisory Board by e-mail, and the content of the e-mail has clearly stated that the theme of the meeting is the listing of Zijiang Enterprise's proposed spin-off subsidiary Zijiang New Materials to the Science and Technology Innovation Board, and the meeting materials are sent out simultaneously as an email attachment (compressed file format). At 11:38, Chen Hu sent a WeChat message to Gan Moujing saying "Can you not send a compressed file Thank you" and "My phone cannot be opened." In summary, Chen Hu had checked the above email before 11:38 on February 17, 2020, so it was determined that Chen Hu was aware of the inside information at the right time.

Second, about Chen Hu and Wu Rongguang's WeChat contact during the sensitive period of insider information. During the sensitive period of insider information, Chen Hu and Wu Rongguang had a WeChat voice call at 12:31 on February 17, 2020 for 8 minutes and 52 seconds, and a WeChat voice call for 1 minute and 10 seconds at 13:15 on the same day. The two parties argued that their contact was normal, reasonable and explainable, but neither of the two parties provided evidence related to the content of the two WeChat voice calls to prove their defense and explanation.

Third, about the abnormality of the trading behavior of the "Wu Rongguang" securities account. The two parties argued that their large-scale fund transfer was a normal fund loan, and that the 557,785 yuan indirectly transferred by Wu Rongguang to Chen Hu was not supported by evidence related to Chen Hu's transfer of 67% of the equity of Zhaoheng Technology to Wu Rongguang; Wu Rongguang argued that he deduced the possibility of the spin-off and listing of Zijiang New Materials based on empirical analysis and market information, and the relevant trading behavior was in line with his investment experience, transaction logic and value investment style, and could not reasonably explain the contact time, capital change time, and other opinions of the two parties. The fact that the trading hours are basically the same as the changes in the inside information and the time of disclosure; Wu Rongguang's argument that the funds of the "Zijiang Enterprise" stock he traded accounted for the small proportion of the market value of all the stocks held in the "Wu Rongguang" securities account and his margin account could not explain the fact that the "Wu Rongguang" securities account bought the shares of "Zijiang Enterprise" was obviously different from the usual trading habits of the account. In summary, the relevant defense opinions of the parties are insufficient to explain the obvious abnormalities in the trading behavior of "Wu Rongguang" securities account, and fail to provide evidence that excludes his use of insider information to engage in relevant securities trading activities.

Fourth, on the calculation of illegal gains and the measurement of penalties. The calculation of illegal proceeds from insider trading in this case adopts uniform law enforcement standards and consistent calculation methods, and after review, the calculation results of illegal gains are accurate. Administrative punishments imposed on parties have fully considered the facts, nature, circumstances, degree of social harm, and cooperation of the parties of the illegal conduct, and conform to the principle of proportionality of excessive punishment.

In summary, our bureau does not accept the defense opinions of Chen Hu and Wu Rongguang.

Based on the facts, nature, circumstances and degree of social harm of the parties' illegal acts, and in accordance with the provisions of Article 202 of the 2005 Securities Law, our bureau intends to decide:

1. Confiscate Chen Hu and Wu Rongguang's illegal gains of RMB587,918.24, impose a fine of RMB1,587,379.25 on Chen Hu and Wu Rongguang for their joint insider trading, and a fine of RMB176,375.47 on Wu Rongguang;

2. Wu Rongguang's illegal gains of RMB224,401.39 were confiscated and a fine of RMB224,401.39 was imposed on Wu Rongguang for insider trading.

The above-mentioned parties shall, within 15 days from the date of receipt of this penalty decision, remit the fines and forfeitures to the China Securities Regulatory Commission (the bank with an account: the business department of the Beijing branch of China CITIC Bank, account number: 7111010189800000162, which shall be directly handed over to the State Treasury), and send a copy of the payment voucher with the name of the party to the Office of the Administrative Punishment Committee of the China Securities Regulatory Commission and our bureau for the record. If the parties concerned are dissatisfied with this penalty decision, they may apply to the China Securities Regulatory Commission for administrative reconsideration within 60 days of receiving this penalty decision, or they may directly file an administrative lawsuit with the people's court with jurisdiction within 6 months from the date of receipt of this penalty decision. During the period of reconsideration and litigation, the implementation of the above-mentioned decision shall not be suspended.

Tianjin Securities Regulatory Bureau

August 3, 2021