Source: Investor Education Center of Shenzhen Stock Exchange
In stock trading, most investors are more vigilant about stocks with excessively large stock price increases or fluctuations in a single day, believing that if there are no good announcements or favorable policy information, there is a suspicion of market manipulation in stocks with large gains or fluctuations Larger. It is not easy to distinguish whether there are market manipulation behaviors in the trading of stocks whose single-day gains or amplitudes are not large but have gone out of a beautiful upward trend within a period of time. Many investors have this question: if they only buy and sell a stock continuously, it will not have a significant impact on the stock price of a single day, and may it also constitute market manipulation? The following case can answer this question.
From July 10th to August 28th, 2015, the K-line trend of stock "X" is shown in the figure below:
In more than a month, the stock price of stock "X" has been rising continuously. Is the value of the company discovered, or is there another story in the transaction? The penalty decision of the China Securities Regulatory Commission revealed the reasons for the stock’s rise: Zhongxin Fuying, a private equity fund management company, operates 11 securities accounts including "A Trust-Hongying No. 206" as an investment consultant. The actual investment decision is made by Li XX is responsible; Wu XX controls 18 trust accounts and 4 personal accounts including "A Trust-Phoenix Huaxiang No. 2". Zhongxin Fuying and Wu XX conspired to trade stock "X" for profit. During the 35 trading days from July 10 to August 28, the accounts controlled by Zhongxin Fuying and Wu Moumou did not obviously trigger daily indicators of short-term manipulation such as pulling up, suppressing, and false declarations. The trading activities actually made a profit of 147 million yuan and 174 million yuan respectively. The China Securities Regulatory Commission determined that Zhongxin Fuying and Wu Moumou’s illegal acts of controlling account transactions include:
1. Continuous trading
There are 25 trading days when the purchase quantity accounts for more than 10% of the market volume, 18 trading days for more than 20%, and 6 trading days for more than 30%.
There are 29 trading days for purchases exceeding 10 million yuan, 12 trading days for those exceeding 50 million yuan, and 6 trading days for buying more than 100 million yuan.
The sales volume accounted for more than 10% of the market volume in 13 trading days, more than 20% had 7 trading days, and more than 60% had 2 trading days.
There are 13 trading days for holding stock "X" accounting for more than 10% of its outstanding shares.
2. Trading between accounts actually controlled
There were 7.12 million shares of stock "X" traded between the securities accounts under its actual control, which accounted for more than 5% of the market volume within 5 trading days.
Article 77 (1) and (3) of Article 77 of the "Securities Law" stipulate two types of market manipulation behaviors, namely, "alone or through collusion, pooling capital advantage, shareholding advantage or using information advantage Joint or continuous trading" and "securities transactions between accounts actually controlled by oneself", which affect the price or volume of securities transactions. In this case, Zhongxin Fuying and Wu Moumou simultaneously implemented the two types of behaviors. The duration of continuous trading manipulation is generally longer, and trading between accounts that you actually control does not actually transfer the ownership of the stock, but only creates the illusion of active trading. Compared with short-term manipulation such as pushing and suppressing, continuous trading manipulation and manipulation of transactions between accounts that are actually controlled are more concealed and require careful analysis and judgment to identify illegal acts.
When investing in the market, investors should follow a rational investment method that conforms to the law of value, conduct a calm analysis based on the situation of the market, industry, and company, and be alert to the false prosperity created by market manipulators that is actively trading and slowly rising, causing investment losses.
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