Brokerage vice president exposed for insider trading, fined 1.35 billion and banned from the market for 8 years.

Regulatory "iron fist" falls heavily again, targeting core executives of securities firms. On November 28, the Jiangsu Securities Regulatory Bureau disclosed a penalty order, Chen, who was the former vice president of a securities company, was confiscated 45.1505 million yuan of illegal gains by the Jiangsu Securities Regulatory Bureau and was fined 90.301 million yuan, and was subject to two securities market entry bans of 8 years and 5 years. The total penalty for "one confiscation and two fines" was 135 million yuan. Chen was involved in using insider information to engage in securities transactions and trading securities. In addition, on the same day, the regulator issued multiple penalties for illegal business practices in securities brokerage, including Orient Shenyang Nan 8th Middle Road Securities Sales Department, which was taken a warning letter by the Liaoning Securities Regulatory Bureau; and Chen Liang, Ye Jianyu, Li Yong, and Zeng Xiaoming were designated as inappropriate candidates by the Zhejiang Securities Regulatory Bureau, and were not allowed to serve as customer development service-related positions or perform the above-mentioned duties for 5 years. Securities firm executives engage in insider trading Chen started working in a certain securities company in August 1999, and held the positions of vice president and other positions during the period of the case as a securities practitioner. Chen's illegal activities mainly included two aspects: First, in using insider information to engage in securities trading, from March 1, 2020 to March 12, 2023, Chen used his position to obtain trading information of 32 securities accounts of private funds and individuals opened in a certain securities company and controlled 8 securities accounts such as "Han" CITIC SEC credit account to engage in synchronized trading with synchronized combination accounts, buying 585 stocks and making a profit of 18.7504 million yuan. Second, in the case of illegal buying and selling of securities, from September 15, 2011 to March 12, 2023, Chen controlled a total of 16 securities accounts such as the aforementioned 8 securities accounts and "Han" CITIC SEC common account as a securities practitioner to buy and sell securities. After deducting the amount corresponding to the synchronized purchase by Chen using insider information and the corresponding sell-out amount, a total of 334 million shares of stocks were traded, with a trading amount of 45.44 billion yuan and a profit of 26.4001 million yuan. During the hearing, Chen argued that he had made contributions to the financial industry and was unable to afford the huge fines, and requested that the multiple of the fines be reduced to one. However, after a review, the Jiangsu Securities Regulatory Bureau believed that this reason did not meet the legal requirements for leniency or mitigation of penalties, so Chen's defense was not accepted. Finally, the Jiangsu Securities Regulatory Bureau confiscated 18.7504 million yuan of illegal gains from Chen's insider trading activities and imposed a fine of 37.5008 million yuan; for Chen's illegal buying and selling of securities activities, they confiscated 26.4001 million yuan of illegal gains and imposed a fine of 52.8002 million yuan. The total penalty was 135 million yuan. In addition, given Chen's status as a senior executive of a securities company and a securities practitioner, his serious misconduct, long duration, large trading amounts, and huge illegal gains seriously disrupted the market order. The Jiangsu Securities Regulatory Bureau imposed two securities market entry bans of 8 years and 5 years on him. During the 8-year ban period, Chen is not allowed to engage in securities business in any institution or hold related senior management positions; during the 5-year ban period mentioned earlier, he is not allowed to directly or indirectly trade in securities on behalf of others. Regulatory crackdown on "rat warehouses" and illegal stock speculation Compared horizontally, the severity of the 135 million yuan penalty and the 8-year ban in the history of securities "rat warehouses" and illegal stock speculation cannot be underestimated. The following are a few typical historical cases. On November 13, the Heilongjiang Securities Regulatory Bureau announced a penalty order, and Tang, the then general manager of the securities investment department of a certain securities company, was fined a total of 4.7 million yuan for three violations. One is the use of proprietary accounts to trade with undisclosed information to directly control buying and selling of 177 stocks such as China Spacesat and Poly Developments and Holdings Group; the second is to imply others to engage in synchronized trading of 2.12 billion yuan; the third is to engage in the purchase and sale of stocks in violation of the identity of industry personnel. In early January of this year, the Chongqing Securities Regulatory Bureau disclosed a penalty order, and during his tenure as president and senior adviser of Xiangcai Securities, Sun engaged in various illegal behaviors such as using undisclosed information to trade, implying others to trade, and engaging in the purchase and sale of stocks in violation of regulations. The total amount of the fine in this case was as high as 18.4229 million yuan. On February 9, 2024, the regulator imposed penalties on dozens of people for illegal stock trading by securities practitioners, among which, Xiong, the then CEO of CMSC, was ultimately subject to a lifetime ban from the securities market for illegal stock trading; Han, the then vice president of China Great Wall, was banned from the securities market for 10 years for illegally using pseudonyms, holding and trading stocks on behalf of others, and fined and penalized with 1.17 billion yuan (slightly lower than the Chen case); Wu, the then general manager of CMB Capital Management, and Zeng, the head of the investment banking department at CMSC, were deemed inappropriate candidates. The expression of "regulatory with teeth" is not an exaggeration, this regulatory attitude has been strengthened and refined recently, further enhancing the enforcement efforts. Wu, the Secretary of the Party Committee and Chairman of the China Securities Regulatory Commission, emphasized at a seminar on studying and implementing the spirit of the Fourth Plenary Session of the 20th CPC Central Committee that regulatory enforcement is more effective and deterrent, and the comprehensive and strict governance of the Party within the China Securities Regulatory Commission is stricter and more practical. Legal experts pointed out that the "one confiscation and two fines" in the Chen case reflects a strict crackdown on illegal behavior such as knowing and breaking the law and illegal stock speculation. The rejection of the defense argument of "unable to afford the fine" also demonstrates the rigid enforcement and eliminates the mentality of those who break the law. In addition, the penalties issued on the same day as the Chen case reveal that strict regulation has entered a new stage of rigorous investigation and normalization. The penalty order disclosed by the Liaoning Securities Regulatory Bureau shows that the Orient Shenyang Nan 8th Middle Road Securities Sales Department had the following issues: the marketing activity plan did not have an audit process and compliance review record; some computers were not included in the monitoring system; broker compensation was only linked to client trading volume, the performance assessment and compensation distribution mechanism for securities brokers was not perfect; and financial product promotion service-related data was not retained. The penalty order disclosed by the Zhejiang Securities Regulatory Bureau shows that Chen Liang, Ye Jianyu, Li Yong, and Zeng Xiaoming, during their employment, seriously violated laws, regulations, and rules related to professional conduct, failed to adhere to professional ethics and conduct standards, and lacked a sense of integrity and compliance awareness. From securities firm executives engaging in "rat warehouses" to compliance loopholes in operating departments, the frequent issuance of regulatory penalties releases a regulatory signal of "full chain, zero tolerance," and the compliance ecology of the securities industry is undergoing a systemic reshaping. This article is reprinted from "Cai Lian Society" and edited by GMTEight: Liu Jiayin.