One month after the发酵 of Li Xuli's "retirement gate" incident, the truth gradually came to light. It was learned that this former public offering fund star and private equity leader is currently under "border control" for allegedly engaging in insider trading during his time at ABC Credit Suisse.
The Truth Emerges
It was reported by the First Financial Daily that Li Xuli may have been involved in significant insider trading during his time at ABC Credit Suisse.
Before his resignation, Li Xuli was a partner and Chief Investment Officer (CIO) at Shanghai Chongyang Investment Management Co., Ltd. (hereinafter referred to as "Chongyang Investment"). Prior to joining Chongyang Investment, he served as the investment director at ABC Credit Suisse Fund Management Co., Ltd. His transition from public offering funds to private equity caused a stir in the industry and was hailed as an "elegant transformation."
"He is currently under 'border control,'" said a relevant person to our reporter.
Border control refers to border restrictions. It is a precautionary measure taken at national border checkpoints through legal procedures to prevent foreign nationals or Chinese citizens involved in cases from evading legal responsibility and causing significant losses to state, collective, or individual properties by taking the opportunity to leave the country. In general, during the period of restricted exit, there is usually no restriction on the freedom of movement within the country for the controlled individuals.
If the above suspicion is confirmed, this would be the seventh case of insider trading investigated in recent years following Tang Jian, Wang Limin, Zhang Ye, etc. Li Xuli surpasses the other six in terms of rank, investment ability, and public reputation.
Industry Shock
Li Xuli was once a pride of the investment world.
Thirteen years ago, at the young age of 25, Li Xuli graduated from the Graduate School of the People's Bank of China and joined the Southern Fund which was then under preparation. From 1998 to 2005, Li Xuli held various positions at Southern Fund Management Co., Ltd., including researcher, trader, fund manager, and investment director. He successively managed Tianyuan Fund and Southern Prudent Fund, both of which maintained positive returns during the bear market from 2001 to 2005.
In 2005, Li Xuli joined ABC Credit Suisse Fund Management Co., Ltd., www.zp-nmg.com, serving as the manager of Jiaoyin Prudent Fund and Jiaoyin Blue Chip Fund, and later became the investment director at ABC Credit Suisse Fund Management Co., Ltd.
During his tenure in public offering funds, Li Xuli won multiple awards such as New Wealth, Morningstar, Golden Bull Fund Manager, renowned for his expertise in macroeconomic research and major trend judgment.
In July 2009, with the halo of a public offering star, Li Xuli entered the private equity sector, exciting the private equity community. He co-founded Shanghai Chongyang Investment Management Co., Ltd. with Qiu Guogen, investing 30 million yuan on the existing Chongyang Investment platform, and served as the Chief Investment Officer.
Fifteen months later, on October 19, 2010, Li Xuli suddenly announced his resignation from Chongyang Investment, shocking the industry. The explanation of his resignation due to "health reasons" failed to convince most people. For nearly a month, rumors about Li Xuli have been circulating, but the truth remained unknown. However, it is well-known that after leaving the public offering funds, Li Xuli repeatedly pointed out institutional issues in the public offering funds, including distorted incentive mechanisms, management layers not being able to hold shares, and lack of normal channels for personal investments by fund managers. He spoke highly and had good relations within the circle.
"This might be the original sin," commented an industry insider on Li Xuli's "border control." "Working in public offering funds, if one gets tainted and loses purity, it's useless to join private equity. Once exposed, it becomes ineffective wherever you go."
Unprecedented Crackdown on Insider Trading
On the 18th, the General Office of the State Council forwarded the Opinions of five departments - CSRC, Ministry of Public Security, Supervision Department, SASAC, and Anti-Corruption Bureau - on lawfully combating and preventing insider trading in the capital market (hereinafter referred to as "Opinions"). The Opinions emphasized fully recognizing the harmfulness of insider trading, strengthening the management of insider information, promptly investigating suspected insider trading behaviors, swiftly making administrative penalties, and protecting investors' legitimate rights.
An industry insider believed that preventing insider trading has always been emphasized by the CSRC over the years, but this is the first time the General Office of the State Council has forwarded it, with five departments jointly combating and preventing insider trading, exerting enormous deterrence.
On the 18th, a relevant official of the CSRC department stated that the CSRC has always attached great importance to insider trading issues in the capital market and adopted multiple measures to severely crack down on insider trading behaviors. In the first half of this year, the CSRC received 121 case leads and added 117 new cases, among which 59 involved insider trading and 14 involved market manipulation.
Statistics show that so far, there have been 6 punished cases of fund insider trading, with 3 occurring this year. On September 6, the CSRC announced the results of handling three insider trading cases. Former fund manager Tu Qiang of Invesco Great Wall Fund Management Co., Ltd. was disqualified from the fund industry, fined 2 million yuan in addition to confiscating illegal gains, and banned from the market for life. Former fund manager Liu Hai of Changcheng Fund Management Co., Ltd. was disqualified from the fund industry, fined 500,000 yuan in addition to confiscating illegal gains, and penalized with a three-year market ban. Former fund manager Han Gang of Changcheng Fund Management Co., Ltd. was legally handed over to the public security organs for criminal responsibility investigation.
"The regulatory authorities are determined and strong in cleaning up the market environment," said a senior executive of a Shanghai fund company. Strict supervision is beneficial for the long-term healthy development of the fund industry. The trust responsibility of the fund industry requires personnel in the industry to standardize themselves with excellent concepts and higher moral standards. He believed that morality and law are the foundations of trust culture. Strengthening the crackdown on insider trading and punishing insider trading are the best warnings.
Term Explanation: Border Control
Border control refers to border restrictions. It is a precautionary measure taken at national border checkpoints through legal procedures to prevent foreign nationals or Chinese citizens involved in cases from evading legal responsibility and causing significant losses to state, collective, or individual properties by taking the opportunity to leave the country. In general, during the period of restricted exit, there is usually no restriction on the freedom of movement within the country for the controlled individuals.
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