In recent years, administrative organs have increased punishment for violations of capital market transactions. The most typical punishment for enterprise insider trading, market manipulation and market disruption has been significantly expanded at the upper and lower limits, and the means of punishment have gradually moved away from simple fine punishment and adopted a variety of punishment methods. In order to achieve the ultimate goal of regulating the chaos of the capital market. This paper will be combined with cases to elaborate on the violation of market manipulation, and further help enterprises to clarify the many risks under capital market transactions.

1. Definition of market manipulation

Market manipulation refers to: enterprises or individuals with a large amount of capital or information advantages use their overwhelming advantages to exert influence on the entire stock market, so that it develops in the direction they want, so as to achieve the purpose of manipulating the stock market price. This kind of manipulation that does not conform to the law of the market will not only cause damage to the market itself, so that the supply and demand relationship is confused, but also make investors unable to correctly judge the market situation, make wrong judgments about the buying and selling of securities, and ultimately damage their basic interests. Therefore, such behavior is strictly prohibited by the Securities Law and is a major securities violation.

2. Common patterns of manipulative market behavior

According to Article 55 of the new Securities Law, the following acts can be regarded as market manipulation:

(1) Illegal speculation. Common means for manipulators alone or through collusion, pooling capital advantage, shareholding advantage or use information advantage joint or continuous trading.

(2) Relative delegation. The common method is that manipulators collude with others to trade securities with each other at a pre-agreed time, price and manner. This method is easy to produce the illusion of active securities trading, so that other investors are deceived and follow up the trading.

(3) Wash sale. A common method is for manipulators to trade securities between accounts that they actually control. This kind of operation is an obvious false transaction behavior, and it is the primary regulation object of our administrative organs.

(4) Other operational behaviors. Including: not for the purpose of transaction, frequent or a large number of declarations and withdrawal of declarations; Using false or uncertain material information to induce investors to conduct securities trading; Make public evaluations, forecasts or investment suggestions on securities and issuers, and conduct reverse securities transactions; Use activities in other relevant markets to manipulate securities markets, etc.

3. Consequences of market manipulation

According to Article 192 of the new Securities Law, those who manipulate the securities market shall be ordered to dispose of their illegally held securities according to law, their illegal gains shall be confiscated, and a fine of not less than one time but not more than ten times their illegal gains shall be imposed; If there are no illegal gains or the illegal gains are less than one million yuan, a fine of not less than one million yuan but not more than 10 million yuan shall be imposed. Where a unit manipulates the securities market, it shall also give a warning to the persons directly in charge and other persons directly responsible, and impose a fine of not less than 500,000 yuan but not more than 5 million yuan.

Market manipulation is similar to insider trading in that it can be punished either for the business that commits the act or for a natural person that commits the act. However, due to the difference between insider trading and insider trading in resources required, enterprises should strictly avoid implementing such behavior themselves rather than regulating employees. Once violations are found, they are often accompanied by severe administrative penalties and market entry restrictions.

[Typical case -- Guangzhou Yuding Investment Co., Ltd. manipulation of the market]

Yu Ding company through a variety of means to manipulate the "Hunan oil pump". From December 27, 2016 to February 9, 2017, the control account group of Yuding Company manipulated the "Hunan oil pump" by means of centralized capital advantage, continuous trading of shareholding advantage, trading between accounts under its actual control, false declaration, etc., and bought 19,819,028 shares with a purchase amount of 1,090,251,256.68 yuan. Sold 19,818,928 shares of "Xiang Oil Pump", the selling amount was 1,105,735,374.17 yuan, and the profit after deducting the transaction tax was 13,764,541.57 yuan. The details are as follows:

First, centralized capital advantage, shareholding advantage continuous trading.

From December 27, 2016 to February 9, 2017, the account group focused on capital advantages and shareholding advantages to continuously buy and sell the "Hunan oil pump". Out of 27 trading days, the account group traded on 25 trading days, of which:

The buying volume of the account group ranked first in 18 trading days, ranked second in 1 trading day, and ranked third in 3 trading days. The account group's buying volume accounted for more than 10% of the market's buying volume on 12 trading days and more than 20% on 7 trading days, peaking at 35.20% on February 8, 2017.

The account group with the first selling volume has 14 trading days, the second one has 1 trading day, and the third one has 2 trading days. The account group's selling volume accounted for more than 10% of the market's selling volume on 12 trading days and more than 20% on 5 trading days, reaching a maximum of 36.53% on February 3, 2017.

Account group trading volume (trading volume) ranked first in 18 trading days, ranked second in 3 trading days, ranked third in 1 trading day, trading ratio (trading volume accounted for the proportion of total market turnover) more than 10% in 14 trading days, more than 20% in 4 trading days. It peaked at 30.16% on February 3, 2017.

The account group has both bought and sold the "Hunan pump" on 18 trading days. In the 23 trading days with buying behavior, the number of applications for purchase totaled 2012, of which 1366 commissioned purchase prices were higher than the market trading price of the moment before the commission, the highest price difference was as high as 4.7 yuan, and the multiple commissioned purchase prices were even higher than the fifth file price of the moment before the commission. Or the amount of ordered buying is higher than the total amount of selling orders in the first five sets of the market before the moment of ordering.

The number of outstanding shares actually controlled by the account group accounted for the total number of actual shares in circulation on the day of "Xiangoil Pump" (hereinafter referred to as the proportion of outstanding shares) of more than 5% on 19 trading days, and more than 10% on 4 trading days, of which the proportion of outstanding shares in February 8, 2017 reached the highest, 14.57%.

Second, trade between accounts that you actually control.

In 10 of the 25 trading days in which the account group traded "Xiangoil Pump", there were transactions between the accounts under its actual control (hereinafter referred to as reverse trading), the number of reverse trading was 3,219,331 shares, and the amount of reverse trading was 177,056,523.9 yuan. Among them, the number of inverse transactions accounted for more than 10% of the total volume of the day's account composition on 7 trading days, more than 15% on 3 trading days, and the highest reached 19.09% on February 6, 2017. In several trading days, there are situations where the price of the first file is higher than that of the moment before the purchase of the order, and even higher than that of the fifth file price of the moment before the purchase of the order.

Third, false declaration of the daily limit.

On January 10, 2017, from 14:48:06 seconds to 14:58:53 seconds, the account group had false declaration of the daily limit. In the case that the buying order of the daily limit price was much larger than the selling order, the account group repeatedly and in large quantities declared to buy the "Hunan oil pump" at the daily limit price. After the declaration, the account group withdrew the order, and then declared the purchase and withdrawal of the order again. The cumulative occurrence of limit price declaration - withdrawal behavior a total of 5 times, obviously not for the purpose of transaction.

From December 27, 2016 to February 8, 2017, the "Hunan oil pump" increased by 13.41%, and the maximum increase reached 16.54% during the period. During the same period, the Shanghai Composite Index rose by 1.42%, and the cumulative increase of the "Hunan oil pump" deviated from the Shanghai Composite Index by 11.99%. After the account group sold intensively on February 9, 2017, the stock price of "Xiang Oil Pump" fell to 54.16 yuan on the same day, a decline of 9.94%.

【 CSRC Analysis 】

The CSRC believes that from December 27, 2016 to February 9, 2017, the Yuding Company controlled the account group, through the use of centralized capital advantages, shareholding advantages of continuous trading, trading between their actual control of securities accounts, false declaration of the daily limit to manipulate the "Hunan oil pump". The violation of the provisions of Article 77 (1), (3) and (4) of the Securities Law constitutes the manipulation of the securities market described in Article 203 of the Securities Law. For the above acts, Yu's shareholder and legal representative Jiang Yu is responsible for stock selection, risk control, and guidance during intraday trading. He plays the role of decision, inspiration, and command, and is directly responsible for the supervisor; Hu Juhua, a staff member of Yuding Company, participated in the decision-making of stock selection and implemented the behavior of capital allocation and placing orders, and was other directly responsible personnel; Wu Huiling, a shareholder of Yuding Company, participates in stock selection and is responsible for financial work, and is the other directly responsible personnel.

【 Case Guide 】

Compared with insider trading, the results of market manipulation are highly similar, but there are obvious differences in behavior patterns. Corporate insider trading makes use of the insider information obtained, while market manipulation often makes use of the financial advantage of the enterprise, which means that the subject of insider trading is more extensive than the subject of market manipulation. Because the access to information is far easier than the accumulation of huge capital. Therefore, the actors who manipulate the market are often enterprises, rather than individuals. In this case, Guangzhou Yuding Investment Co., Ltd. used its capital advantage to manipulate the valuation of "Hunan Oil pump" through repeated trading and continuous trading between securities accounts under its actual control. The circumstances involved were serious, and it was an inevitable result that it was found to constitute market manipulation and was subject to administrative punishment.