Post-80s chairman suspected of Insider Trading: stock price plummets

On December 22, Li Jian, a lawyer from Zhejiang Yufeng law firm, told the 21st Century Business Herald that the chairman of a listed company was investigated by the CSRC for suspected insider trading during his term of office. The statement that “the investigation is aimed at individuals and has nothing to do with the company” is hard to convince. < / P > < p > the night before, Jinke culture announced that it was learned that Wang Jian, chairman of the board of directors, was put on file by the CSRC for investigation because he was suspected of insider trading in reducing the company’s shares from November 2019 to March 2020. < / P > < p > Jinke culture stressed that this investigation was aimed at Wang Jian and had nothing to do with the company. This investigation will not affect his normal performance of duties in the company, nor will the company’s production and business activities. On the morning of December 22, the reporter of 21st century business report called Jinke culture securities affairs department, and the staff said, “we don’t know what insider trading situation” (Wang Jian) is involved in. This is an investigation against him personally, “and” ultimately, it depends on the investigation results and corresponding punishment decisions of the CSRC. “. < / P > < p > according to the above-mentioned people from the securities affairs department, “as the chairman of the board, Wang Jian will still preside over the work of the general meeting of shareholders.”. The person said that the general meeting of shareholders is the fifth extraordinary general meeting of shareholders of Jinke culture in 2020, which will be held on December 24. < / P > < p > according to the public information, Wang Jian, the chairman born in 1988, graduated from University, and has the technical qualifications of software designer, network engineer and system analyst of MIIT. In May 2010, he founded Hangzhou zhexin Information Technology Co., Ltd. as executive director and manager. Since October 2014, he has been the chairman and general manager of Hangzhou zhexin Information Technology Co., Ltd. < / P > < p > on September 14, 2015, Zhejiang Jinke, which has been listed for only four months, suspended its trading and planned a major asset restructuring. At the end of December of that year, it acquired 100% equity of Hangzhou zhexin Information Technology Co., Ltd. held by Wang Jian and other nine trading parties for 2.9 billion yuan (issuing shares and paying cash), bringing mobile game assets under its command. < / P > < p > Wang Jian obtained 285 million shares of Jinke culture due to his participation in the non-public offering and capital accumulation fund converted into share capital, with a lock-in period of 36 months from the end of the offering. At the same time, Wang Jian began to perform his duties in Listed Companies: from August 2016 to June 2020, he served as the director and general manager of Jinke culture, and has been the chairman of Jinke culture since June 2019. < / P > < p > on June 19, 2019, Jinke culture announced that Wang Jian plans to reduce his holding of no more than 2% of the company’s shares in the next six months, and the reason for reducing his holding is to repay the financing funds of stock pledge, so as to reduce the proportion of stock pledge. At that time, Wang Jian held 17.85% of the shares of the listed company. According to the statistics of 21st century business reporter, Wang Jian reduced his holding for 9 times in the five months from November 2019 to March 2020, and cashed out about 461 million yuan according to the number of shares reduced and the average price of reduction. < / P > < p > although Jinke Culture said that “this investigation is aimed at Wang Jian and has nothing to do with the company”, the staff of Jinke culture securities affairs department also made it clear that Chairman Wang Jian will attend and preside over the shareholders’ meeting held on December 24, but legal professionals have different views on this. On December 22, Li Jian, a lawyer from Zhejiang Yufeng law firm, told the 21st Century Business Herald that the chairman of a listed company was investigated by the China Securities Regulatory Commission (CSRC) for suspected insider trading during his tenure, and the saying that “the investigation is aimed at individuals and has nothing to do with the company” is hard to convince. < / P > < p > Li Jian further pointed out that “referring to previous cases, there may be three possibilities for follow-up development. One is that the securities regulatory department only investigates the case that the chairman of the board of directors is suspected of insider trading; the other is that the securities regulatory department then files a case to investigate the information disclosure violations of listed companies. A typical case is that Yang Huaijin, chairman of Hairun photovoltaic, was punished by the CSRC for suspected of insider trading, and the CSRC punished him Third, if the illegal circumstances of insider trading are serious, the parties may be investigated for criminal responsibility of the crime of insider trading. ” In Li Jian’s opinion, the announcement disclosed that “insider trading is suspected of reducing the company’s shares from November 2019 to March 2020”, in which march 2020 is the key time point. “If the insider trading occurs before March 1, 2020, it shall be punished according to the old securities law; if the insider trading continues after March 1, 2020, it shall be punished according to the new securities law. If it is punished according to the new securities law, the cost of violating the law will be greatly increased, and the fine will be changed from more than one time and less than five times of the illegal income to more than one time and less than 10 times of the illegal income. If there is no illegal income, the fine imposed shall be increased from 30000 yuan to 600000 yuan to 500000 yuan to 500000 yuan and less than 5 million yuan. ” < / P > < p > “during the investigation period, it can be considered that he (Wang Jian) can perform his duties normally. After the completion of the investigation, if it only involves illegal reduction, it is nothing more than confiscating the illegal income to the company in accordance with the provisions of the company law. If insider trading is involved, administrative penalty shall be imposed or the case shall be transferred to the public security department for investigation of criminal responsibility. ” On December 22, Yu Jiong, a lawyer from Shanghai justice law firm, also told 21st century business report. < / P > < p > the announcement of Jinke culture clearly states that Wang Jian, the chairman of Jinke culture, is suspected of insider trading during November 2019 to March 2020. Then, what kind of undisclosed information is Wang Jian most likely to use to reduce his holdings and cash out? < / P > < p > according to the statistics of 21st century economic report reporters, there are 50 announcements in this period, one of which is the most critical one, related to Jinke culture’s performance forecast in 2019. < p > < p > on February 28 this year, Jinke culture released its performance express for 2019, with an estimated performance loss of 2.399 billion yuan, which pointed out that it was mainly due to the company’s expected impairment of goodwill and other assets. < / P > < p > within the first 10 days of the release of the above performance express, Wang Jian reduced his holdings of 11.2413 million shares of Jinke culture by centralized bidding, accounting for 0.32% of the total share capital of Jinke culture, involving an amount of 48.23 million yuan. < / P > < p > in response, Shenzhen Stock Exchange pointed out that “the above reduction took place within 10 days before the disclosure of Jinke culture’s performance express in 2019”, and Wang Jian’s above behavior violated the provisions of article 1.4, article 3.1.11 of the GEM Listing Rules (revised in November 2018) and article 3.8.17 of the guidelines for the standardized operation of GEM listed companies (revised in 2015). In view of the above violation facts and circumstances, Shenzhen Stock Exchange issued a notice of criticism to Wang Jian, which was recorded in the integrity file of the listed company. < / P > < p > on June 15, this year, Jinke culture disclosed an announcement clearly that Wang Jian disclosed the reduction plan on January 13, 2020, and planned to reduce the company’s shares no more than 70112561, accounting for 2% of the company’s total share capital in the next six months after 15 trading days from the disclosure date of the reduction announcement. As of the disclosure date of the announcement, Wang Jian has reduced 53054692 shares, and the reduction plan has not been fulfilled. In this equity change, Wang Jian’s share reduction does not conform to the GEM Listing Rules of Shenzhen Stock Exchange. < / P > < p > not only that, on February 4 at the beginning of this year, Shenzhen Stock Exchange also issued a supervision letter to Wang Jian, pointing out that during the period from August 15 to August 27, 2019 and from October 16 to October 21, 2019, it reduced its holdings of Jinke culture shares by means of centralized bidding due to compulsory position closing, involving a total amount of about 57.99 million yuan. The above reduction occurred within 30 days before the disclosure of Jinke culture’s 2019 semi annual report and the third quarter report, which constituted a sensitive period transaction. On March 5, this year, Shenzhen stock exchange sent a letter to Jinke culture asking whether the company “has the situation of profit adjustment by withdrawing large amount of asset impairment reserves”. < / P > < p > on April 29, 2020, Tianjian certified public accountants, as an auditor of the annual report, issued reservations on Jinke culture’s annual report in 2019, mainly involving Jinke culture’s “funds occupied by related parties”, “provision for IP copyright impairment of intangible assets”, “provision for impairment of long-term equity investment and accuracy of fair value of other equity instruments”, etc . < / P > < p > from 2018 to April 2020, Jinke culture was occupied by the controlling shareholder Jinke Holding Group Co., Ltd. and its related parties for non operating purposes, and the balance at the end of each period was 211 million yuan, 1.55 billion yuan and 1.67 billion yuan respectively. < / P > < p > although the above occupied principal and interest have been returned, Tianjian certified public accountants pointed out that “it failed to obtain sufficient and appropriate audit evidence to confirm whether the amount of funds occupied by related parties of Jinke culture company is accurate, or to obtain sufficient and appropriate audit evidence to judge the recoverability of the above illegally occupied funds of Jinke culture company.” < / P > < p > in addition, the provision for impairment of IP copyright of intangible assets of Jinke culture in 2019 is 239.8067 million yuan, including the IP copyright purchased in 2019 (the original value is 113.6816 million yuan). According to the opinion of Tianjian certified public accountants, “except for the brief explanation on the provision for impairment provided by the company, we are unable to perform further audit procedures to obtain sufficient and appropriate audit evidence to judge the accuracy and rationality of the provision for IP copyright impairment of intangible assets.” In this regard, on December 14, Shenzhen Stock Exchange also issued a letter of concern, asking Jinke culture to explain one by one the settlement progress of the matters involved in the qualified opinions in the annual audit report of 2019 and whether the impact on the company’s financial report has been eliminated; to supplement and disclose the reasons for the new employment of Lixin Accounting firm and whether the impact of the company’s and Tianjian accounting firm’s qualified opinions on the financial report of 2019 has been eliminated In addition to the existence of major disputes. < / P > < p > on October 23 this year, Wang Jian, who was concurrently the financial director of Jinke culture in August 2019, resigned for personal reasons, and Qin Haijuan was appointed as the new financial director from the date of deliberation and approval by the board of directors to July 7, 2023. < / P > < p > Disclaimer: the purpose of this article reprinted by CNFC is to convey more information, and it does not represent the opinions and positions of CNFC. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk. < p > < p > Chinanet is a state key news website under the leadership of the Information Office of the State Council and the management of China foreign language publishing and Distribution Bureau. Through 11 versions in 10 languages, the website publishes information 24 hours a day. It is an important window for China to carry out international communication and information exchange.