The CSRC has successfully investigated and dealt with a typical cross-border market manipulation case abusing the Shanghai-Hong Kong Stock Connect. As the first of its kind since the launch of Shanghai-Hong Kong Stock Connect in November 2014, this case served as a practical test for the joint enforcement mechanism under the Stock Connect. On October 17, 2014, the CSRC and SFC signed the MoU on Strengthening of Regulatory and Enforcement Cooperation under Shanghai-Hong Kong Stock Connect, which complemented all practices in relation to enforcement cooperation, encompassing Alerts and Exchange of Investigatory Information, Joint Investigation, Service of Documents, Execution, Investor Compensation, and Publication of Information, etc.. It aims to efficiently fight against cross-border market abuse and misconduct, to reinforce cross-border enforcement cooperation, to maintain market order on both sides, and to protect the legal rights of investors on both markets.
Investigation by the CSRC found out that Tang Moubo and several complices were suspected of manipulating the stock of Zhejiang China Commodities City Group Co., Ltd., one of the Connect stocks in the Northbound Trading Link, with an illegal gain of over RMB 40 million. During the investigation, the CSRC followed leads which led to another case in which Tang and others gained RMB 250 million by manipulating other 5 stocks on the Mainland market.
The CSRC takes a strong stance against all manipulative activities and will crack down any attempt to disrupt market order by anyone in anywhere. Habitual offenders will be recorded in the Market Integrity File and monitored closely. No leniency shall be shown if found guilty again.
The spokesman Zhang Xiaojun said that the CSRC highly appreciated the assistance and help offered by the SFC. With the Stock Connect program in place, violators may employ even more covert means to manipulate the market from offshore. Enhanced enforcement cooperation between the Mainland and Hong Kong is the guarantee for successful Stock Connect programs. Preventing and cracking down cross-border market manipulating, insider trading, misrepresentation and other misconduct in the securities and futures market is a long-term task for regulators in the Mainland and Hong Kong, both of whom put enforcement cooperation top on their agenda. Regulators on the two sides will build a more efficient and sound cross-border enforcement mechanism to safeguard the Stock Connect program for both markets.