Source: JobTube, Arianna J., Freya W., Josh B.
for utilizing the inside information of securities trading via WeChat to trade illegal stock exchange, which also meant the WeChat message history could be used as evidence of the capital market for the first time.
The administrative penalty of Liu
The administrative penalty of Ren
The History of What Happened
From the end of 2017 to the beginning of 2018, the actual controllers of Guanfu Holding Co., Ltd, decided to transfer stock rights and revitalize the company's assets through stock restructuring. After the introduction of a middleman, Guanfu decided to acquire Shanghai Shangang, and then merged other steel e-commerce platforms to form a closed-loop supply chain. So on the afternoon of May 22nd, 2018, Liu and Zhou, two representatives of Shanghai Shangang, and the shareholder of Guanfu met in Shenzhen and reached a consensus on the acquisition of Shanghai Shangang by Guanfu orally.
At around 13:01 on May 31st, 2018, the Letter of Intent for merger and acquisition was signed after being modified by both parties. Guanfu immediately applied for suspension of trading and issued the announcement on suspension of trading of major assets reorganization on June 1st, 2018.
As per the Securities Law, it was a major investment of the company that Guanfu intended to purchase 100% of the equity of Shanghai Shangang, which belonged to inside information before public disclosure.
WeChat Message History as the evidence
Liu's Insider Trading
Liu held 90% equity of Shanghai Shangang and also was the chairman and legal representative. In the process of Guanfu's planned acquisition of Shangang, the insider information shall be known to him no later than May 30th, 2018.
In the afternoon of May 31st, 2018, Liu asked a question to his partner Zhou via his WeChat, but then withdrew it (the withdrawal record was kept on the WeChat Message History).
Zhou replied "Dont send it through WeChat" and "Yes", and then he sent a voice to Liu, the content of which was "Don't say more about this information about the acquisition with other people, it's all inside information". Liu replied "Yes". Subsequently, Liu transferred 3.5 million Yuan to his own securities account, and bought 840,000 shares of "Guanfu shares", with a transaction amount of 3.4 million yuan.
As of the suspension of trading of Guanfu shares on June 1st, 2018, Lius securities account only held Guanfu shares.
Ren's Insider Trading
On May 22nd, 2018, another person in charge of Shangang, named Zhou, informed Ren that Shangang and Guanfu that the framework agreement had been signed. On the morning of May 31st, 2018, Ren and Zhou made a voice call via WeChat for 25 seconds. Subsequently, Ren transferred 4 million Yuan to her securities account, and bought nearly 540000 shares of Guanfu shares at 3.99 Yuan per share, with a transaction amount of more than 2.15 million Yuan.
As per Fujian Securities Regulatory Commission, during the sensitive period of inside information, the WeChat existing evidence could identify Liu and Ren as "illegally obtaining inside information" and "using the inside information to engage in securities trading activities".
So they ordered Liu and Ren to deal with the illegally held shares of Guanfu, and fined Liu 600,000 Yuan and Ren 500,000 Yuan.
The Law
On October 14th, 2019, the Supreme People's Court announced the Civil Action Evidence Certain Stipulations, which stipulated that electronic data could be formally used as evidence in a lawsuit.
The following information and electronic documents are included in electronic data:
Information published by web pages, blogs, WeiBo and other network platforms;
Communication information of network application services such as SMS, e-mail, instant messaging and communication groups;
User registration information, identity authentication information, electronic transaction record, communication record, login log and other information;
Documents, pictures, audios, videos, digital certificates, computer programs and other electronic documents;
Other information that can prove the facts of the case stored, processed and transmitted in digital form.
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