- Jiangsu Wuzhong Industrial’s (600200.SS) senior management is under investigation for insider trading, as reported by 21cbh.com.
- The China Securities Regulatory Commission (CSRC) is investigating five senior management team members, including the Chairman and General Manager.
Why It Matters:
- CSRC is investigating whether senior management’s stocks purchases during the period of August 28-September 1, 2015 related to a later merger deal. The Chinese stock market bubble collapsed in June 2015, and the Chinese government called on senior managements within public companies to buy their own stocks in order to boost confidence. As a result, these five senior managers purchased a significant number of shares during the period.
- The CSRC has claimed these mangers used the government’s calling to cover their activities. The company announced a merger deal soon after in October and its share price increased significantly.
- Jiangsu Wuzhong Industrial claimed that in conjunction with the merger, the company had issued non-public shares, and as a result, the deal is not material in terms of the new market capitalization. However, the argument is not likely to sway regulators.