A friend of an executive of Gree Electrical Appliances Inc. has lost 3.68 million yuan for insider trading of Shanghai Highly (Group) Co., Ltd. shares.
Yu Jun, an acquaintance of Wang Jingdong, the former vice president, financial manager and board secretary of Gree has been found guilty of insider trading by the Guangdong Securities Regulatory Bureau.
The bureau said Yu and Wang held four telephone conversations at a "sensitive period for Gree" - it was planning to increase its stake in Highly. The authority said Wang leaked the information to Yu.
Crime Through Acquaintance
In April 2018 chairperson Dong Mingzhu told several of her top executives - including Wang - that Gree intended to increase its stake. In July Highly announced Gree had increased its stake in the company from 5% to 10%, according to the Guangdong regulators.
According to China's Securities Law the revelation of Gree's increased shareholding is "inside information." As Wang's acquaintance, Yu's trading of Highly shares "abnormally matched" with the timeline of Gree's execution - suggesting insider trading, the authority said.
Yu opened a trading account with Sinolink Securities in June 2017, with his own cash. Between May 30 and July 2, 2018, the account purchased 930,300 Highly shares for 10,029,860 yuan ($1,501,116). Then between June 27 and July 9, Yu sold Highly shares for 10,902,383.84 yuan. He made 935,732.14 yuan in profit, according to calculations by the Shenzhen Stock Exchange.
Yu told his WeChat contacts to purchase Highly shares.
Yu has had 921,706 yuan confiscated after the deduction of dividend tax, and was fined 2,765,118.06 - three times the confiscated amount. All the money must be wired to the China Securities Regulatory Commission within 15 days.
Stripped Of Rank
The 50-year-old Wang was an 18-year veteran with Gree and was board secretary, vice president and financial manager for 11 years. He was seen as a potential chairperson.
Gree reported 6.3 billion yuan to 7.2 billion yuan in net profit for the first half of 2020 - a decline of 48% to 54% year on year.
The company dismissed Wang as financial manager. He was replaced by Liao Jianxiong.
In August Wang resigned all his positions for "personal reasons."
Analysts said at the time, Wang's "resignation" was also related to a new investment by Hillhouse Capital Group.
Wang directly held 884,674 shares of Gree Electric - or 0.01% of the company's total outstanding shares.
Top Power Change
In October last year investment fund Zhuhai Mingjun, backed by Hillhouse Capital, was poised to acquire a 15% stake in Gree Electric from its government-owned parent, Zhuhai Gree Group Co. Ltd., in a deal with an estimated value of $7.5 billion, Bloomberg News reported.
Zhuhai Gree was wholly owned by the Zhuhai State-Owned Assets Supervision and Administration Commission in South China's Guangdong province. It was the power behind Gree Electric as China's largest air conditioner maker and was listed on Shenzhen Stock Exchange in 1996.
On Dec. 2, Gree and Zhuhai Mingjun signed a share transfer deal - 15% of Gree's shares will be transferred to Zhuhai for 41.662 billion yuan over three years.
"We want to become a truly market-oriented, legalized and institutionalized company," chairperson Dong said.
Analysts said that with its shares more dispersed, Gree Electric successfully changed from a state-controlled company to a company without controlling shareholders and actual controllers.
