After fleeing for more than two months, Zhu Yidong, the actual controller of Shanghai Fuxing Industrial Group Co., Ltd. (hereinafter referred to as Fuxing Group), was escorted back to China by the Shanghai police on August 29.Recently, the China Securities Regulatory Commission formally imposed administrative penalties on Fuxing Group and related parties for manipulating the stock price of Dalian Electric Porcelain (002606.SZ) by taking advantage of capital and information advantages. Zhu Yidong manipulated the market with an actual loss of 551 million yuan.And imposed a maximum fine of 600,000 yuan and a three-year ban from entering the securities market.

Zhu Yidong is the actual controller and chairman of Fuxing Group, and is fully responsible for the work of Fuxing Group. The China Securities Regulatory Commission determined that he was the organization and decision-maker involved in the manipulation of the case, and he cooperated with the investigation during the investigation of the case.Li Weiwei was the main perpetrator of the manipulative behavior in this case, and he refused to cooperate with the investigation of the Securities Regulatory Commission, and the circumstances of the violation were particularly serious.Li Weiwei was fined 2 million yuan by the China Securities Regulatory Commission.

This case of stock price manipulation began in 2016. Due to the unsophisticated trading techniques, the Shenzhen Stock Exchange’s big data monitoring system quickly discovered anomalies, and the regulator intervened in the investigation. CCTV made an exposure report in early 2018.

Since Fuxing Group, the party involved, has several private equity fund management companies, the negative information has aroused public attention and investors’ doubts, which has greatly affected the financing ability of private equity, and has become an important fuse for the break of Fuxing’s capital chain.

The China Securities Regulatory Commission found that Fuxing Group and Li Weiwei successively controlled the use of Guangdong Yuecai Trust Co., Ltd. - Yuecai Trust - Minsheng Shijie No. 7 Collective Fund Trust Plan and other 25 institutional accounts and 436 personal accounts including Wan Mou to trade Dalian Electric Porcelain stocks; Moreover, the IP address, telephone number, transaction equipment and other transaction terminal address information of the above-mentioned account transactions of Dalian Electric Porcelain partially overlapped, and some accounts had capital exchanges with the accounts of the parties involved in the case, and the transaction characteristics were highly similar.

In the whole chain, there is conspiracy and division of labor between Fuxing Group and Li Weiwei.Fuxing Group has its own brand and financing capabilities, and provides more funds and assistance; Li Weiwei is a stock trader who claims to be the number one trader in North China.The China Securities Regulatory Commission also issued a warning to Zheng Weixing and imposed a fine of 500,000 yuan.

This cooperation has an important background. At that time, when Fuxing Group acquired Dalian Electric Porcelain in March 2016, in order to ensure the smooth acquisition, Zhu Yidong wanted to arrange professional traders to buy a large number of stocks in the secondary market first, so as to obtain morechips, and at the same time increase the market value of listed companies, so they found Li Weiwei.

The cooperation mode is that Fuxing Group provides a fund allocation margin to Li Weiwei, and Li Weiwei is responsible for allocating funds from off-site and operating accounts to trade Dalian Electric Porcelain.

In the early stage, the capital allocation account of the securities investment department of Fuxing Group was also handed over to Li Weiwei for operation.In the later stage, Fuxing Group's support and cooperation for Li Weiwei involved all aspects, not only providing necessary funds, but also including venues, and even after becoming the actual controller of Dalian Electric Porcelain, they cooperated in releasing good information.

In terms of funds, Zhu Yidong has a quota authorization for Zheng Weiwei's fund transfer, and Zheng Weixing can transfer the deposit to the bank account of the fund distributor designated by Li Weiwei within the authorized quota.

According to incomplete statistics, from July 2016 to March 2017, personal bank accounts controlled by Fuxing Group paid a total of about 746 million yuan in deposits to bank accounts controlled by Li Weiwei, and paid deposits in total of about 9.21 million yuan to the bank accounts of other partners who cooperated with Li Weiwei.100 million yuan, a total of about 1.667 billion yuan was paid.

However, Li Weiwei privately increased the leverage ratio many times during the trading process, used Fuxing Group’s margin and allocation funds to trade other stocks, and changed the account password, which led to the unstable performance of Dalian Electric Porcelain from the end of October to the beginning of November 2016.The stock price fell sharply in several trading days due to the forced liquidation of positions by the capital. Fuxing Group used its own asset management products to buy Dalian Electric Porcelain in the secondary market.

According to a CCTV report, as of December 2016, the book profit of the account exceeded 600 million yuan.

From December 2016 to April 2017, Li Weiwei still privately traded other stocks through high-leverage allocation of funds.Some Dalian Dianci forcibly closed their positions. On March 2, 2017, Dalian Dianci suspended trading and issued an announcement to start a major asset reorganization.

On December 6, 2017, after the listed company resumed trading, the account group successively sold the stocks involved. As of March 28, 2018, the total loss was 551 million yuan.

The methods used by Fuxing Group and Li Weiwei to manipulate the market are also relatively common, mainly using capital advantages to drive up stock prices, trading between accounts controlled by themselves, making false declarations, and using information advantages to manipulate stock prices.

In the end, the China Securities Regulatory Commission imposed a maximum fine of 3 million yuan on Fuxing Group in accordance with Article 203 of the Securities Law and provided that there was no illegal income, and issued a warning to Zhu Yidong, the directly responsible person, and imposed a maximum fine of 600,000 yuan.

In addition, the China Securities Regulatory Commission also imposed three-year and lifetime bans on Zhu Yidong and Li Weiwei from the securities market.During the prohibition period, they are not allowed to engage in securities business or serve as directors, supervisors, or senior managers of listed companies or unlisted public companies.

It is worth mentioning that Zhu Yidong is currently under criminal detention by the public security department, and according to Article 182 of the Criminal Law, whoever manipulates the securities and futures markets, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and may also be fined; if the circumstances are particularly serious, shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years and shall also be fined.This means that in addition to administrative penalties, relevant entities that manipulate the market may also face criminal penalties.■