Original title: Fines are paid first!

"Capital player" Xianyan was sentenced to compensate investors 4.7 million yuan, and was previously fined more than 3 billion yuan for manipulating stock prices!

  On the 29th, the Shanghai Financial Court made a first-instance verdict on a case involving 13 plaintiff investors suing the defendant Xianyan for manipulating the securities trading market and publicly pronounced the judgment, ordering Xianyan to compensate the plaintiff for a total of more than 4.7 million yuan in losses.

  Because Xian Yan said that under the administrative responsibility and criminal responsibility investigation, he was unable to bear the civil compensation liability in this case.

Investors in winning the case may face the risk of having no property to enforce.

According to the principle of priority of civil compensation liability, the corresponding funds in the criminal case of Xianyan's manipulation of the securities market were preserved accordingly.

After the judgment takes effect, the above-mentioned funds can be preferentially used to execute the compensation liability determined by the civil judgment, so as to maximize the relief of the rights of small and medium investors in securities.

  On the morning of July 25, the Shanghai Financial Court held a public hearing on the case of the plaintiff Yu and other 13 investors and the defendant Xian Yan for manipulating the securities trading market.

  After being fined a huge sum of money, Xian Yan went to the public again because of the lawsuit.

  case

  On March 30, 2017, the China Securities Regulatory Commission issued [2017] No. 29 "Decision on Administrative Punishment", which affirmed that Xian Yan, during the period from January 17, 2014 to June 12, 2015, adopted the advantages of centralized funds and held shares. Consecutive trading of advantages and information advantages, and illegal acts of manipulating the securities market through transactions between securities accounts actually controlled by them, false declarations, etc., ordered to deal with illegally held securities, confiscated 578 million yuan of illegal gains, and imposed a fine of 2.892 billion yuan fine.

  During the trial on July 25, Xian Yan himself recognized his conduct of securities manipulation, but raised several objections at the same time.

  He believes that its manipulation ended on June 12, 2015, and the trading behavior of investors has no causal relationship with it; the price fluctuation of Duolun shares is mainly affected by systemic risks such as the stock market crash in 2015; investors have irrational investment behavior, should bear the corresponding responsibility for investment losses; information manipulation also constitutes securities misrepresentation, and the target company should bear the main responsibility for compensation, etc.

  In this regard, the Shanghai Financial Court held that, according to Article 77 of the 2014 Securities Law, any person is prohibited from manipulating the transaction price or volume of securities in the securities market by various means, and manipulating the securities market and causing losses to investors, the behavior A person shall be liable for compensation according to law.

  The Shanghai Financial Court held that in this case, Xian Yan's manipulation began on January 17, 2014, and ended on June 12, 2015.

However, Xianyan controlled the rhythm and content of the information disclosure of Duolun shares, and at the same time constituted securities misrepresentation and was subject to administrative punishment.

With reference to the relevant judicial interpretations, it can be confirmed that November 14, 2016 is the date when the influence of information manipulation is eliminated.

  The day was more than a year away from the end of the entire manipulation. During this period, the cumulative turnover rate of Duolun shares exceeded 100% for many times. It should be able to cover a reasonable period for the elimination of the impact of transaction-based manipulation, and it can be used as a part of the elimination of the impact of the entire manipulation. day.

  As far as the causality of losses is concerned, the Shanghai Financial Court explained that the price of securities is affected by various factors such as the market, the industry, and the issuer's own style.

In order to accurately determine the causal relationship of losses, it is necessary to reasonably strip away the influence of factors unrelated to manipulation on the stock price, which involves the issue of financial asset pricing and is closely related to the assessment of investor losses.

Therefore, the Shanghai Financial Court has introduced a professional third-party institution for verification and settlement.

  After deducting the part that investors have already received in the previous securities misrepresentation liability disputes, Shanghai Financial Court finally ordered the defendant Xian Yan to compensate the plaintiff for a total of more than 4.7 million yuan in losses.

  In January 2021, the "Xianyan's Breach of Faith Injuring the Interests of a Listed Company's Second Instance Criminal Judgment" issued by the Shanghai High Court showed that Xianyan was finally sentenced to four years and three months in prison and a fine for harming the interests of the listed company and manipulating the securities market. 11.8 million yuan.

  It is understood that this case is the first case of securities manipulation tort liability disputes in the country where the main board market transaction type and information type manipulation are mixed.

  Judging from the various compensation cases in the market at present, the compensation cases are mainly caused by the release of false information by listed companies.

There has never been a case of being held liable for compensation involving transactional market manipulation before the Xianyan compensation case.

The judgment of Xianyan's compensation case has played an exemplary and leading role in taking up the legal weapon for victims of various manipulation cases.

  manipulate

  Data show that the stock price of Duolun shares rose from 6.68 yuan to 22.61 yuan during the period when the CSRC believed that the stock price was manipulated.

  When disclosing the case, the China Securities Regulatory Commission said: "Xian Yan, as the actual controller, chairman, and secretary of the board of directors of Duolun, used various means to manipulate the stock price of listed companies. His behavior was particularly bad and seriously disrupted the order of the securities market."

  During the trial on July 25, the plaintiff investor claimed that he suffered losses from buying and selling shares of Duolun Industrial during Xianyan’s manipulation of the securities market, that his investment decisions were affected by the manipulation, and there was causality between the investment loss and the manipulation. relationship, requesting that the defendant Xian Yan be ordered to bear all of its investment losses.

  The defendant Xianyan did not recognize the losses claimed by the plaintiff, and believed that the manipulation period determined in the administrative penalty decision was from January 17, 2014 to June 12, 2015.

  During the trial, both the plaintiff and the defendant entrusted an agent ad litem to appear in court, and the China Institute of Finance of Shanghai Jiao Tong University, as a third-party loss assessment agency, appointed experts to appear in court for questioning on the "Securities Investor Loss Verification Opinion" issued by it.

  At that time, Li Yonghong spent 360 million to acquire 60% and 40% of Duolun Investment held by Dongcheng International and Jinjia Company, and became the actual controller of Duolun shares.

However, only 7 months later, in July 2012, Li Yonghong transferred Duolun shares to Xianyan at a price of 340 million yuan.

Li Yonghong lost 20 million in this transaction.

But Xianyan made a lot of money.

  Before joining a listed company, Xian Yan worked in Beijing Tianyi Law Firm and is familiar with the law.

One year after he joined Duolun, he started a series of operations.

  From July 2013 to February 2015, Xian Yan took advantage of his position to whitewash the company's performance by forging the signature of Mr. Lin, a subcontractor of the real estate project developed by the subsidiary, and making false application and approval forms for fund payment. In the name of paying for construction and current accounts, the subsidiary's funds were transferred to the account of a certain Lin and the account of the Jingmen Chutian City Project Department actually controlled by the company, and then transferred to multiple companies actually controlled by Xianyan through the above accounts , In the personal account, the total amount of funds transferred out has reached more than 120 million yuan.

  In April 2015, Xianyan, then the actual controller, chairman and secretary of the board of directors of Duolun, personally decided to start the company name change procedure and instructed his subordinates to change the company name to "Piitupi Financial Information Service (Shanghai) Co., Ltd. Company”, which highly overlapped with the Internet finance theme that the market was keen to hype up at that time.

  In response to such key information, Duolun shares delayed for nearly a month before releasing an announcement.

Since then, Duolun shares have risen by the limit of 77.37% for 6 consecutive trading days, and the Shanghai Composite Index has risen by 16.75% in the same period.

  As the biggest beneficiary of this renaming incident, Xianyan controlled 28 securities account groups through it. From April 30 to May 11 of the same year, he bought a total of more than 25.2 million shares of Duolun shares, and the purchase amount 286 million yuan.

During the manipulation period, the account group held “Duolun shares” accounting for more than 5% of the total share capital of the stock on 179 trading days, and the highest shareholding date was December 26, 2014, holding 47.155 million shares, accounting for 13.85% of the total share capital. %.

  Regarding the above behavior, the court held that Xian Yan, as the chairman and actual controller of the listed company, violated his duty of loyalty to the company, took advantage of his position, and used the funds of the listed company for personal profit-making activities, causing the listed company to suffer heavy losses, which constituted a breach of trust. The crime of harming the interests of listed companies; and by controlling the pace and content of information disclosure of listed companies, misleading investors to make investment decisions, affecting the price and volume of securities transactions, and conducting related transactions, which constitutes the crime of manipulating the securities market.

  In September 2019, when the court pronounced the verdict in the first instance, it decided to execute a five-year imprisonment and a fine of 11.8 million yuan; the illegal gains shall be recovered.

In view of the fact that during the second trial, Xianyan voluntarily pleaded guilty and accepted punishment, and with the help of his family, he paid all the fines and refunded part of his illegal gains.

As a result, the court recently made a final judgment, deciding to execute a fixed-term imprisonment of four years and three months, and fined 11.8 million yuan.

  According to the stipulation that "if the sentence is first detained before the execution of the judgment, one day of detention shall be converted into one day of the sentence", Xian Yan's sentence expires on August 9, 2021.

  Huiqiu case

  Before Xian Yan was imprisoned, his misdeeds and violations of laws and regulations on ST Huiqiu (now renamed Tianxiaxiu) made his reputation notorious.

  Gu Guoping and Xianyan signed an agreement in April 2016, intending to sell the management rights of Huiqiu Technology, the shares and affiliated interests of Huiqiu Technology to Xianyan at a transfer consideration of 700 million yuan.

After paying 400 million yuan in advance, Xian Yan served as the representative of Huiqiu Technology's securities affairs, and sent three directors to actually control the company's management rights, seals and information disclosure keys.

Later, because Gu Guoping's equity held through the asset management plan exploded and could not be transferred according to the contract, Xian Yan did not actually obtain the controlling rights of Huiqiu Technology, but actually controlled the company's board of directors.

  It is worth mentioning that in the process of the actual controller going through two rounds of changes, Huiqiu Technology said that there is no actual controller.

During the period, the supervisory department of the Shanghai Stock Exchange issued regulatory letters to Huiqiu Technology many times, requesting it to respond and verify the status of the actual controller and provide written explanations from Xianyan and Gu Guoping, but Huiqiu Technology did not verify and explain as required.

  After Xian Yan secretly took over Huiqiu Technology, the negative news of Huiqiu Technology continued one after another.

  On July 28, 2016, Ruilai Jiayu increased its holdings of 19.7396 million shares of Huiqiu Technology through the secondary market, accounting for 4.999978% of the total share capital of Huiqiu Technology.

On the same day, Ruilai Jiayu notified Huiqiu Technology to disclose the report on changes in equity, but Huiqiu Technology used the reason that the board of directors did not pass the "Proposal on Disclosing the Report on Changes in Equity of the Company's Shareholder Shenzhen Ruilai Jiayu Investment Enterprise (Limited Partnership)". refuse to disclose.

Under the urging of the Shanghai Stock Exchange, Huiqiu Technology did not disclose a reminder announcement until August 9, and there was a serious delay in information disclosure.

In view of the serious violation of information disclosure of Huiqiu Technology, and the refusal of Huiqiu Technology and relevant responsible persons to implement the regulatory requirements, the Shanghai Stock Exchange implemented ST processing on September 13.

  As of early October 2016, Ruilai Jiayu held 43,345,642 shares of ST Huiqiu, accounting for 10.98% of its total shares, and became the largest shareholder of ST Huiqiu.

However, since Relais Jiayu did not reorganize the board of directors of ST Huiqiu in time, ST Huiqiu is still under the actual control of Xianyan.

  Ruilai Jiayu sent a letter to ST Huiqiu at the end of December 2016, claiming that it has frequently encountered serious violations of governance and information disclosure, and that the board of directors has repeatedly violated its powers and infringed upon the legitimate rights and interests of the majority of shareholders.

Ruilai Jiayu proposed to hold an extraordinary general meeting of shareholders and dismiss the then chairman Dong Wenliang and other senior executives.

  In this regard, ST Huiqiu sued Ruilai Jiayu, attributing the reason for the decline of Huiqiu Technology's stock price and the risk warning of ST on the Shanghai Stock Exchange to Ruilai Jiayu.

At the beginning of January 2017, Xian Yan and several members of the board of directors drafted and submitted 1001 shareholders' meeting proposals. The content of the proposals included "About the company's establishment and improvement of employee love approval system", "Proposal on Adjusting Weekends to Thursdays and Fridays" and other strange clauses. The holding of the extraordinary shareholders meeting was postponed.

  A few days later, ST Huiqiu was investigated by the China Securities Regulatory Commission. It was found that ST Huiqiu had 10 violations, including seriously disrupting the order of information disclosure. The circumstances were serious and the nature was bad.

The "shell" battle ended with Gu Guoping, Xian Yan and a number of related personnel being sentenced to life-long bans from entering the securities market.

  (e company)