Published On: Fri, Oct 29th, 2010

China’s First Market Manipulation Trial to Start

The No 2 Intermediate People’s Court will today hear China’s first case of alleged manipulation of the securities market.

Wang Jianzhong, 42, from Anhui province, is charged with gaining illegal income after he allegedly opened several securities accounts under his or others’ names when he worked as general manager of Beijing Shoufang Securities Investment Consulting Ltd.

The company is a local investment consulting enterprise established in 2001.

Wang allegedly bought securities in advance and then recommended them online to push up the prices.

According to the prosecutor, Wang manipulated 38 securities, including Industrial and Commercial Bank of China (ICBC) and China Unicom, which he allegedly manipulated 55 times with nine securities accounts between Jan 9, 2007, and May 21, 2008.

The volume of securities he bought accumulated to approximately 5.26 billion yuan.

According to the indictment, he gained about 125 million yuan after selling the securities at an accumulated price of approximately 5.38 billion yuan.

Wang said his money came from stock earnings that started in 1993, according to Lu Hao, a prosecutor with the No 2 Branch of the People’s Procuratorate of Beijing who arraigned Wang a few months earlier.

“He thinks his behavior is just immoral, rather than a crime,” Lu said.

The case is the first one in which a suspect is charged with manipulating the securities market.

The China Securities Regulatory Commission (CSRC) issued an administrative punishment on Oct 23, 2008, confiscating Wang’s alleged illegal earnings of 125 million yuan and fining him an equal amount.

Suspects who manipulate the price of stocks or securities to gain illegal proceeds or to transfer risks can be sentenced to no more than five years in prison or criminal detention. They can also be fined no less than 100 percent, and not more than 500 percent, of the illegal income, under China’s Penal Code.

The Hefei Municipal Intermediate People’s Court in Anhui province has begun proceedings against Wang Jianzhong’s two older brothers, named Wang Jianhua and Wang Qianyi, and Zhao Zhihong, a brother of Wang’s ex-wife.

Their trial began on July 22.

They are charged with money laundering. The three were said to have helped Wang Jianzhong conceal illegal earnings of more than 385 million yuan, according to a local legal portal.

The case was scheduled to be heard in July but delayed two times for further investigation.

Wang Jianzhong is currently in custody in Beijing Municipal No 1 Detention House.

He was once known as the “God of Stocks” for his successful analysis and predictions.

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