The article “A shares in the related account of” Qianzhan Department “made waves” published by Shanghai Securities News on February 23 attracted market attention. The reporter learned from multiple channels that the regulatory authorities have paid attention to the relevant matters in the investment operation of “Qianzhan system”. On the evening of February 23, the target companies Zhe Jiang Headman Machinery Co.Ltd(688577) and Hunan Corun New Energy Co.Ltd(600478) of “Qianzhan Department” suspected of illegal placards received regulatory work letters respectively. The reason was “clarifying regulatory requirements for matters related to media reports”, and the regulatory objects involved were “listed companies and general shareholders”.
According to the exclusive investigation of Shanghai Securities News, the core members of the “Qianzhan system” headed by Mr. and Mrs. Jiang Shibo also include ye Maoyang, Shen Xianglong, Liu Yichao, Gao Ercai, Jiang Shuiliang, etc. in the past, they have converged to trade the shares of many A-share companies in the secondary market investment.
“It is a persistent ailment of the A-share market to control the market and even take the lead. There have been many cases in the past. Under the background of comprehensively promoting the reform of the registration system, it is particularly important to maintain a fair, just and open market order and effectively protect the legitimate rights and interests of investors. Such behavior of influencing and even manipulating the secondary market through capital advantages should face stricter supervision.” A broker who declined to be named said that large private placement or niusan has a great influence on the market, especially small and medium-sized stocks, and they should be prevented from “cutting leeks” in the market by using their capital and information advantages.
In the A share market, the so-called “Niu San” has been punished for many cases because of the violation of the placards. As early as October 2007, Zhou Xingang traded shares of meixinda (now known as ” Wangneng Environment Co.Ltd(002034) “) with a family of three and five securities accounts including Nanjing Eurasia and Saint Meilun. When the shareholding ratio reached 5%, he did not disclose in time or stop trading shares. In 2011, the CSRC issued a ticket to Zhou Xingang, gave a warning and fined 300000 yuan. At that time, Zhou Xingang Shen argued that he was not familiar with the securities law, and his shares were not sold, which had been in a state of loss. He requested a reduction or exemption of fines, which was not adopted by the CSRC.
Zhou Xingang did not stop at this point. His family account group stepped on the line for many times when trading Shanghai Yongli Belting Co.Ltd(300230) , Shenzhen Hirisun Technology Incorporated(300277) , New Universal Science And Technology Co.Ltd(300472) , Kangyue Technology Co.Ltd(300391) and other stocks, which constituted violations. In January 2017, the Shenzhen Stock Exchange once restricted trading on the accounts of Zhou Xingang and his wife and daughter.
It is staggering that Zhou Xingang is still “punished and committed repeatedly”. In May 2021, the CSRC again issued a ticket to Zhou Xingang and punished Zhou Xingang for not disclosing and restricting the trading of five stocks such as Teyi Pharmaceutical Group Co.Ltd(002728) held by Zhou Xingang’s account group in excess of the proportion. Finally, Zhou Xingang was fined a total of 22.1 million yuan.
The super Niu sanzhang Jianping family in the A-share market also raised their cards Shanghai Hile Bio-Technology Co.Ltd(603718) for three times. Due to violations in the process of increasing their holdings, the regulatory authorities took administrative regulatory measures to issue a warning letter. The well-known Niu Xiaotang was also fined 2.85 million yuan for illegal placards China National Software And Service Company Limited(600536) and short-term transactions.
“Only by resolutely cracking down on illegal acts can we effectively protect the interests of small and medium-sized investors. Under the background of the reform of the registration system, the regulatory authorities have increasingly cracked down on illegal acts such as illegal card raising and short-term trading. After the implementation of the new securities law, the crackdown and the amount of fines are greater than ever.” Some securities traders pointed out that in some cases of joint ownership and stock price manipulation, it can still be seen that institutions or individuals deliberately evade supervision.
In addition, insiders said that many niusan or private placement have shareholding through vest accounts, which is intended to avoid the red line of raising cards and subsequent supervision. “In fact, there is a loophole in this. Relevant laws and regulations identify the joint shareholding of legal persons and their shareholders or senior executives. However, it is difficult to determine whether several natural person shareholding subjects, even if there is equity or employment relationship between several parties, must be consistent. Finally, it must be confirmed by checking the source of funds.”
In this regard, Wang Zhibin, a lawyer from Shanghai Minglun law firm, said that the current measures for the administration of the acquisition of listed companies and relevant listing rules have certain limitations and cannot list all the situations that constitute the relationship of concerted action. For example, whether the situation of corporate investors and corporate executives holding shares of listed companies at the same time constitutes a “concerted action” relationship can only be determined by the regulatory authorities according to the principle of “substance over form”.
The principle of “substance over form” is important for law enforcement, but this ambiguity and uncertainty often trigger potential violators to take risks. To this end, securities professionals called on the regulatory authorities to timely update the relevant provisions of the measures for the administration of the acquisition of listed companies according to the actual situation of the market, clearly list the high-frequency and suspicious concerted action relationship, and avoid some “loopholes” in the rules of private placement and cattle scattering from the source, which is also an embodiment of protecting the interests of small and medium-sized investors.
