If it is said that the "thunder" in the first half of this year's A shares is due to the change of performance, then the "thunder" in the second half of the year will start with the loss of contact and criminal detention of the actual controller.
As of July 2019, at least 4 listed companies have had their chairman detained so far, namely Wang Zhenhua of Xincheng Holdings, Luo Jing of Boxin Holdings, Zhang Pengqi of *ST Pengqi, and Huang Zuoqing of ST Tianbao. The reasons for the detention of the chairman of these listed companies are different. Wang Zhenhua is suspected of molesting children, Zhang Pengqi is suspected of insider trading and leaking inside information, Huang Zuoqing is suspected of false invoicing, and the reason for Luo Jing's criminal detention has not been disclosed.
And the "bomb" that the actual controller was detained made investors tremble with fear. There were no early warning signs. After the incident, it quickly fermented and the stock price plummeted. What should investors do in the event of a similar incident?
A reporter from China Business News has sorted out 10 cases in which the actual controllers of listed companies have lost contact in the past two years, for readers to "take history as a mirror".
The reason behind the arrest of "Boss"
A reporter from China Business News has compiled a comprehensive list of the criminal detention or loss of contact between the chairman or actual controller of all listed companies since 2018. On the whole, suspected violations of the "Securities Law" and other economic crimes are relatively common, including* There are 7 companies including ST Pengqi, ST Tianbao, Boxin Co., Ltd., *ST Kangde, Kaiying Network, Tibet Development and Jinya Technology.
One of Xincheng Holdings was a case of personal involvement in a crime, and there were also two listed companies, Steyer and Nanfeng, who were not aware of the situation.
The suspected crimes of the actual controller and chairman of a listed company in the capital market are often not individual acts, but are inseparable from the team and the company’s financial fraud, market manipulation, insider trading, etc. On file for investigation, the fraudulent issuance of Jinya Technology is a typical case.
On June 25, 2018, Jinya Technology issued an announcement that the company was transferred to the public security organ by the China Securities Regulatory Commission due to suspected criminal cases. The CSRC investigation showed that Jinya Technology falsely added the 2008, 2008, The operating income from January to June in 2009 accounted for 47.49% and 68.97% of the publicly disclosed operating income for the current period; the inflated profits from January to June in 2008 and 2009 accounted for 85.96% and 109.33% of the publicly disclosed profits for the current period, respectively. Jinya Technology was transferred to the public security organ by the China Securities Regulatory Commission for suspected illegal activities such as fraudulent issuance of stocks.
One month later, on July 27, Jinya Technology announced that Zhou Xuhui, the company's actual controller and holding 27.98% of the shares, has been criminally detained by the Public Security Bureau directly under the Sichuan Provincial Public Security Department on suspicion of fraudulent issuance of stocks.
In most cases, there are early signs of a listed company being suspected of fraud or counterfeiting, which has also attracted market attention. It is basically foreseeable that the actual controller will be detained after the incident. However, there are also cases where the actual controller suddenly "loses contact" and the listed company is unable to get in touch with them. Such situations are more difficult to predict in advance.
Nanfeng shares belong to such a situation. On May 5, 2018, it issued an announcement stating that the board of directors received a notice from the family of Yang Zishan, the chairman and general manager of the company, and was unable to get in touch with Yang Zishan at present, and the family had reported the case to the police.
Yang Zishan's sudden loss of contact seems to be the starting point for the worsening situation of Nanfeng Shares. The announcement on July 27 showed that after Yang Zishan lost contact, according to the information provided by the creditor who claimed to be Yang Zishan, there may be fraudulent use of the company's name in his personal debts. as a borrower or guarantor. The company confirms that the above loans or guarantees are not corporate actions, and they have not been decided or approved by the company's board of directors or the general meeting of shareholders. On May 25, 2018, the company reported the case to the Economic Crime Investigation Brigade of Nanhai Branch of Foshan Public Security Bureau.
Since then, the assets of Nanfeng Co., Ltd. have been frozen and lawsuits have occurred frequently.As of November 3, a total of 16 bank accounts have been frozen, the actual frozen amount is about 53.2932 million yuan, a total of 9 real estates have been seized, and the equity of 4 subsidiaries has been seized; the company has received a total of 15 cases of litigation and arbitration materials.
Whether it is loss of contact or criminal detention, the above-mentioned cases involve economic crimes. The recent criminal detention of Wang Zhenhua, the actual controller of Xincheng Holdings, is a case of company turmoil caused by personal involvement in non-economic crimes. On July 3, the news that Wang Zhenhua, the then chairman of Xincheng Holdings, was detained for suspected child molestation quickly fermented, and the police and company announcements both confirmed it. After the incident, Xincheng Holdings hurriedly held a board of directors, and Wang Xiaosong, the son of Wang Zhenhua, replaced the chairman seat.
How many lower limits are there for resumption of trading? Collateral is key
The actual controller holds a large number of shares in the listed company, and the secondary market will inevitably react in the event of an accident. However, there is a difference in the timing of the market reaction. If a company like *ST Kangde (formerly known as "Kangdexin") "explodes" first and the actual controller is later in the accident, the secondary market will be "exploded" as early as In the early stage, the response has been relatively full, and the shock may no longer be obvious when the actual controller is taken by the police to take coercive measures.
On January 15, 2019, Kangde newly issued a special risk warning notice of uncertainty about the maturity and redemption of two ultra-short-term financing bills totaling 1.5 billion yuan. Affected by many factors such as the environment and the slow collection of sales, the company's capital turnover experienced temporary difficulties", which caused the market to question the authenticity of its performance.
Immediately on January 22, Kang Dexin was investigated by the China Securities Regulatory Commission for suspected violations of laws and regulations. The arrival of the investigation notice also brought a limit of 8 consecutive trading days, and the stock price fell to 4 on February 1. Yuan/share, the white horse stock fell to the altar in the past. At present, the CSRC's investigation conclusion has been "officially announced", and the stock has also been suspended by the Shenzhen Stock Exchange since July 8, and the stock price is fixed at 3.52 yuan per share.
Another situation is that, like Seazen Holdings, the company has no major problems with its own operations, but the actual controller's personal reasons suddenly "black swan", or the market's debt to the company due to the loss of contact with the actual controller The secondary market will respond sensitively and quickly to the chain reaction of doubts in terms of business operations, management and other aspects, and the stock price will often fall sharply for several days in a row.
At 3:00 p.m. on July 3, a news about the chairman of a real estate company suspected of molesting children quickly fermented. At that time, the A-share market had closed, and the share prices of its two Hong Kong-listed companies, New Town Development Holdings and New Town Joy Service, plunged rapidly and closed at the close. It fell more than 20% in the previous hour. That night, Seazen Holdings quickly replaced the chairman, but it was unable to stop the three consecutive limit-downs after Seazen Holdings.
Steyr announced on August 21, 2018 that it was unable to get in touch with Chairman Li Xiaozhen, who was in a state of loss of contact, and the company was unable to understand the specific reasons for Li Xiaozhen's loss of contact. At that time, Li Xiaozhen had only been the chairman of the company for more than a month, and the "strange" loss of contact immediately caused Steyr to report a daily limit. For nearly a year since then, Steyr's share price has basically been in a downturn, and in June this year, it created a record low of 1.48 yuan per share.
In addition, the impact of the loss of the actual controller on the company's stock price also depends to a certain extent on the pledge of the actual controller's equity. The stock price is caught in a vicious cycle of continuous decline.
Let's avoid lightning in advance and hide from pits and agencies afterward
In the face of frequent criminal detention and loss of contact with the actual controller, investors are not powerless, and some can even prevent it in advance.
The situations that can be prevented in advance are usually the company's performance and fundamentals "exploding" first, followed by investigation and financial crisis, and the stage where the actual controller is taken to implement compulsory measures is already the end of the incident.
For example, the "real hammer" of Jinya Technology's fraudulent issuance fell, and the criminal detention of the actual controller is almost a certain event. Investors can withdraw early and stop losses in time for such high-risk stocks.
Since the overdue debts of Kang Dexin occurred in January, the CSRC's investigation lasted for half a year. During this period, the situation of Kang Dexin's inflated profits was gradually confirmed in the market's attention, and investors also had enough events to clear their positions. Unfortunately, from December 31, 2018 to March 31, 2019, the number of KDX shareholders decreased from 158,400 to 155,500 within three months, and the average number of shares held by each household increased instead of decreasing. The vast majority of investors took a fluke and didn't quit.
As Kangde Xin's inflated profits were verified by the China Securities Regulatory Commission, the Shenzhen Stock Exchange quickly announced that trading would be suspended from July 8, or would initiate major violations.The legal delisting mechanism, the current trading window for 150,000 investors has been closed. When it is opened again, there may be several lower limits and the losses will increase, and if the market is delisted, the losses will be even more immeasurable.
Another type that is more difficult to predict is the criminal detention of Wang Zhenhua, the then chairman of Seazen Holdings, which did not involve economic crimes. The company's previous operating conditions were normal, but it was a personal violation. Once the incident broke out, unless you can "prescient" like the Ningbo Liuting Street Sales Department of China Galaxy Securities, and can "accurately escape" after the incident and before it is disclosed to the public, it will be difficult to avoid a few limit-downs.
For such "black swan" events, the holding institutions will generally give the latest valuation in a quick response afterwards, that is, predict that the stock will have "several lower limits". Institutions have a relatively good understanding of the research and risk of holding companies, and their forecasts for the limit down are generally more accurate, which has a good reference value for ordinary investors.
For example, on the evening of July 4th, a number of funds announced to adjust the target price of Seazen Holdings to 31.12 yuan, which is expected to have three lower limits, and subsequent changes in stock prices also accurately reflected the institution's target price.
However, there may be a future solution to situations like the "raid" on investors of Seazen Holdings.
On July 9, the China Securities Regulatory Commission and seven central entities issued opinions on strengthening information sharing and punishment for dishonesty in the pilot project of the registration system for the Sci-Tech Innovation Board, starting from two aspects: strengthening inter-ministerial information sharing and joint punishment for dishonesty. The working mechanism is that, during the process of reviewing and registering on the Sci-Tech Innovation Board, the CSRC and the Shanghai Stock Exchange find that issuers, listed companies and relevant personnel have illegal and untrustworthy records in other fields and other departments, and use them as an important reference for performing their registration review duties.
The relevant person in charge of the CSRC stated that the establishment and improvement of a stock issuance and listing system centered on information disclosure will allow investors to obtain true, accurate, complete, timely and fair information on which to make value judgments and investment decisions. Being responsible for investment decisions is an important prerequisite for the smooth advancement of the registration system pilot program and the protection of investors' legitimate rights and interests, and an important part of improving the basic system of the capital market and enhancing the effectiveness of supervision.
"In practice, the issuer's controlling shareholder, actual controller, legal representative of a listed company, directors, supervisors and senior managers often take the role of organizing, instigating or directly engaging in fraudulent issuance and information disclosure illegal activities, or conceal important The incident leads to fraud, and most of them bear direct responsibility for illegal and dishonest behavior. In addition, the employees of intermediary institutions fail to perform their duties diligently in accordance with the law, which is also an important reason for indirectly condoning or causing the relevant illegal consequences.” said the person in charge of the China Securities Regulatory Commission.
With the advancement of the registration system, information disclosure will be more open and transparent, and the concept of inter-ministerial information sharing and joint punishment for dishonesty may be further promoted to other sectors in the future.
The situation of "Wang Zhenhuas" being announced three days after committing the crime may only become less and less under the registration system.