The Paper reporter Sun Mingwei
26 Chinese "Niu San" were fined more than 75 million US dollars (about 502 million yuan) by the US Securities Regulatory Commission.
According to an announcement released on the official website of the Securities and Exchange Commission (SEC) on June 15, the court ruled that a total of 26 members were involved in a stock price manipulation case involving at least 3,000 U.S. stocks and the amount involved in the case exceeded $35 million. Paid over $75 million.
Specifically, the court judgments include Shuang Chen, Wenwen Du, Lirong Gao, Jing Guan, Tonghui Jia, Xuejie Jia, Honglei Shi, Lujun Sun, Huailong Wang, Jiadong Wang, Jiafeng Wang, Linlin Wu, Lin Xing, Yong Yang, Jiancheng The 16 defendants, including Zhao and Forrest (HK) Co., Limited, are jointly and severally liable for the illegal gains of US$35,603,400 and interest of US$5,989,800.
In addition to repayment of principal and interest, each defendant must pay a civil penalty of $2 million.
In addition, the court ruled that 10 named defendants (Relief Defendants) Weiguo Guan, Jingquan Liu, Rishan Liu, Weigang Yang, Jingru Zhai, Song Geng, Qinghua Ren, Jixiang Teng, Xiangjia Yang and Xiuchun Zhang should pay $3,505 to $533,700 respectively etc., plus prejudgment interest, totaling $1,512,300.
A nominee defendant, in the U.S. legal system, is a person named in a civil lawsuit but not charged with an illegal act.
The announcement shows that in October 2019, the SEC filed a lawsuit in the federal court in Boston, Massachusetts.
The SEC alleges that multiple traders from China manipulated the prices of thousands of stocks, most of which traded in low volume, while they deliberately created a false boom in stock trading, driving up or down prices for illicit profits.
Meanwhile, the SEC has taken urgent action to freeze the properties of 18 defendants.
On November 12, 2019, the court issued a preliminary injunction to freeze the assets of all defendants and nominal defendants.
On December 23, 2019, the SEC amended the indictment to add two defendants and eight additional named defendants to the original charges.
In the lawsuit documents submitted by the SEC, the trading methods of these shareholders were explained in detail.
They typically use at least two brokerage accounts, first placing a few small sell orders through a helper account to drive down the stock price, and then using a winner account to buy large stocks at low prices.
After accumulating positions, they then place small buy orders that push up the market price of the stock, thus making a profit by selling a large amount of stock at a high market price.
The reverse is also true, they create the illusion of buying first, bid up the stock price and then sell.
This kind of behavior of manipulating the stock market is called "spoofing", which refers to an act of making false quotations in the stock market or futures market and then withdrawing the order.
"Spoofers" influence the market by pretending to buy or sell at a specific price, creating the illusion of demand, trying to lure other traders into trading, and profit from buying and selling at the new price in the market.
"We allege that the defendants engaged in extensive manipulation, went to great lengths to evade detection, placed trades in over 100 different accounts opened by several different brokerage firms, and submitted forged documents to open new accounts in other people's names." SEC Market Abuse Regulation Department Director Joseph G. Sansone said in a statement released in 2019.
The two masterminds in the case, Jiali Wang and Xiaosong Wang, were not mentioned in the verdict.
In September 2021, the SEC has penalized Xiaosong Wang, permanently barring him for violating U.S. anti-fraud provisions, claims and civil penalties, to be determined by the court later.
Meanwhile, the SEC continues to file fraud charges against another mastermind, Jiali Wang.
In addition, another criminal complaint filed by the U.S. Attorney's Office for the District of Massachusetts against the pair is still pending.