Rare heavy punishment! The China Securities Regulatory Commission has taken action
On September 15th, the China Securities Regulatory Commission reported that in accordance with the overall requirements of the Party Central Committee and the State Council on cracking down on securities illegal activities in accordance with the law, the China Securities Regulatory Commission has launched an investigation into the illegal reduction of stock holdings by the major shareholder of "Wo Le Home", Yu Fanyi, and his concerted action persons. The illegal facts have been quickly identified, and administrative legal responsibilities have been pursued with severity and speed. A "Notice of Administrative Penalty in Advance" has been delivered to the relevant parties.
On the evening of the same day, the Shanghai Stock Exchange issued the decision of relevant disciplinary punishment, publicly condemned the company's shareholders Yu Fanyi and the persons acting in concert Liu Fujuan and Xizang Evey Venture Capital Co., Ltd. and Yantai Evey Trading Co., Ltd., and circulated a notice of approval.
For the above-mentioned disciplinary actions, the Shanghai Stock Exchange will also notify the China Securities Regulatory Commission and the Jiangsu Provincial Local Financial Supervision and Administration Bureau, and record them in the integrity files of listed companies.
The illegal reduction of stock holdings by major shareholders, directors, supervisors, and senior executives of listed companies, which undermines the foundation of market integrity, disrupts normal trading order, and harms the interests of small and medium-sized shareholders, has always been a key regulatory and law enforcement focus of the China Securities Regulatory Commission. Recently, the China Securities Regulatory Commission has further regulated the reduction of shares and guided major shareholders, actual controllers, and other entities of listed companies to jointly maintain a healthy market ecosystem. Yu Fanyi and his concerted action personnel disregarded laws, regulations, and regulatory requirements, openly and illegally reduced their holdings of our company's stocks, which is of serious nature and has a negative impact, and should be severely punished.
After investigation, in 2021, when Yu Fanyi and his concerted action persons purchased 5% of "Wo Le Home" stocks through the secondary market, they failed to fulfill their information disclosure obligations as required and were issued a warning letter by the China Securities Regulatory Commission. Prior to the occurrence of this illegal reduction, Yu Fanyi and his concerted action persons held a total of more than 22.44 million shares of "Wo Le Home" stock, accounting for 7.11% of the company's total share capital. From September 5th to September 6th, 2023, Fan Yi and his concerted action personnel reduced all of the above-mentioned stocks, but did not stop trading in accordance with the law when the reduction ratio reached 5%. The subsequent illegal transaction amount was 107 million yuan, and the illegal gains were 16.53 million yuan. The China Securities Regulatory Commission plans to confiscate the aforementioned illegal gains of Fan Yi and his concerted action persons in accordance with the law, and impose a strict fine of 32.95 million yuan.
Shareholders holding more than 5% of the shares are important shareholders of listed companies and have special responsibilities to the company. They are a key minority in the company's business development and governance operations. The new Securities Law further strengthens the regulation of shareholder reduction behavior, and stipulates special obligations in terms of buying and selling, information disclosure, etc. The China Securities Regulatory Commission hopes that major shareholders, actual controllers, and relevant executives of listed companies and other market entities can learn from this case, remain vigilant at all times, deeply learn from lessons, faithfully fulfill their fiduciary obligations, strengthen the spirit of good faith contracts, enhance their awareness of compliance with laws and regulations, and strictly follow the requirements of the Securities Law, the Company Law, and relevant regulatory rules to regulate the reduction of stock holdings.
The China Securities Regulatory Commission (CSRC) stated that the next step will be to resolutely implement the decision and deployment of the Party Central Committee to "activate the capital market and boost investor confidence", accelerate the improvement of regulations and systems on reducing holdings, further increase the crackdown on violations of shareholding reduction, quickly investigate and punish, impose heavy penalties, and find and punish together, so that those who dare to violate the law will receive the punishment they deserve and pay a heavy price.
