Dangxian High Technology (000669) announced today that on January 11, the company received an administrative inspection decision letter from the China Securities Regulatory Commission (CSRC), forwarded by its major shareholder Zhongxun New Technology Co., Ltd., and its actual controller, Tianjin Dangxian Group Co., Ltd. The inspection letter addresses the administrative misconduct of Tianjin Dangxian Group, Li Jianxin, Liu Jianguo, and Fan Chunming during the company's 2009 restructuring planning period for engaging in insider trading.
The announcement stated that on November 19, 2009, the company received notice from its actual controller, Tianjin Dangxian Group, which was planning a significant corporate restructuring and had reached an overall direction agreement with the restructuring party. On that day, the company issued a significant matter suspension announcement.
On December 11, 2009, after receiving notification from the controlling shareholder, the company announced that due to the inability to reach an agreement between the restructuring party and Dangxian Group, it would be unable to complete the restructuring plan within the time frame, leading to the termination of this significant corporate restructuring plan.
According to the relevant provisions of the Securities Law, the aforementioned information constitutes material non-public information that could significantly impact the market price of the company's securities. Dangxian Group and the actual controllers of Zhongxun, Li Jianxin, and Dangxian Group Vice President Liu Jianguo were directly involved in the relevant knowledge of the insider information, making them insiders with access to such information.
Upon investigation by the CSRC, it was found that Tianjin Zhongrun High Technology Investment Co., Ltd., through methods such as transferring funds via Zhongxun, specifically implemented operations led by then Director, Vice President, and Financial Director Fan Chunming. Between October 15, 2009, and November 10, 2009, they purchased 750,400 shares of the company’s stock, actually settling for 300,400 shares, and realized a net profit of RMB 370,900 after deducting taxes and fees.
Based on the CSRC inspection report, Dangxian Group was fined RMB 370,900 for illegal gains of RMB 370,900; Li Jianxin and Liu Jianguo were warned and each fined RMB 300,000; Fan Chunming was warned and fined RMB 200,000.
Dangxian High Technology announced that after preliminary estimates by the company's finance department, all previously individually provisioned bad debt reserves have been recovered. This information may significantly impact the company's performance for the year 2011. The company is currently communicating with auditors for final confirmation. To protect investor interests and avoid significant impacts on the company's stock price, according to relevant regulations, the company has requested a stock suspension starting January 13, 2012, pending further announcements before resuming trading.
Despite the investigation, this action seems insufficient to alleviate investor concerns. It was noted that unusual stock movements and insider trading suspicions related to Dangxian High Technology had occurred frequently before.
In August 2009, while Dangxian High Technology was embroiled in restructuring rumors, its stock price continuously hit the upper limit. Shen Yin Wan Guo Honglixi Branch, known for frequent involvement in stocks like Hua Kui Umbrella and Dongfang Securities (601099), appeared again in the transaction seats of Dangxian High Technology on August 7, purchasing RMB 3.2014 million worth of shares. On August 10, Dangxian High Technology announced a suspension. Three months later, on November 10, 2009, Dangxian High Technology suspended trading for one month due to significant matters but ultimately failed in the restructuring.
In 2010, over nearly three months, the stock price of Dangxian High Technology dropped from around RMB 14 to near RMB 33. After resuming trading on July 13, Dangxian High Technology triggered a massive rebound in the secondary market. Initially pulling off three consecutive daily limits, after consolidating, it surged again. On September 20 and 21, it achieved two more consecutive daily limits, rising from RMB 14.25 before the suspension to a peak of RMB 33.66. The maximum increase was 136.21%. Some industry experts pointed out that the abnormal stock movement before the restructuring of Dangxian High Technology was very evident, suggesting possible restructuring information leaks.
Regarding the phenomenon of repeated insider trading despite prohibitions, industry experts believe the main reason lies in the insufficient severity of domestic penalties for insider trading and lack of enforcement resolve.
Dangxian High Technology (000669) announced today that on January 11, the company received an administrative inspection decision letter from the CSRC forwarded by its major shareholder Zhongxun New Technology Co., Ltd., and its actual controller, Tianjin Dangxian Group Co., Ltd. The inspection addressed the administrative misconduct of Tianjin Dangxian Group, Li Jianxin, Liu Jianguo, and Fan Chunming during the company's 2009 restructuring planning period for engaging in insider trading...