Parties concerned: Wang Zhongjuan, female, born in July 1968 and domiciled in Group 75, Zhengyang Huodian Community, Longsha District, Qiqihar City, Heilongjiang Province, holds the positions of executive director, general manager and also legal representative of Shenzhen King of Stock Technology Co., Ltd. (hereinafter referred to as King of Stock).
Sun Sheng, male, born in May 1972 and domiciled in 5-7—3A, Yinyuezhisheng Garden, Buji Town, Longgang District, Shenzhen City, Guangdong Province, holds the position of supervisor of King of Stock.
Ma Yong, male, born in May 1971 and domiciled in Room 601, Block 1, 50 Yuzhang Road, East Lake District, Nanchang City, Jiangxi Province, possesses the qualification for engaging in securities investment consultancy.
Liu Bowei, male, born in April 1969 and domiciled in Room 501, Unit 20, 104 Anguo Street, Daoli District, Harbin City, Heilongjiang Province, possesses the qualification for engaging in securities investment consultancy.
In line with relevant regulations in the “Securities Law of the People’s Republic of China” (Securities Law) put into force on January 1, 2006, the China Securities Regulatory Commission (CSRC) placed on file for investigation and heard the case of King of Stock’s illegal engagement in securities investment consultancy business, and apprised according to law the parties concerned of the facts, reasons and basis for the decision on market entry banning as well as their lawful rights. Sun Sheng proposed a defending opinion while the other three parties concerned did not put forward any statements, defending opinions or ask for hearing. The case has been concluded upon investigation.
The investigation revealed that King of Stock had committed the following illegal activities:
At the end of August 2007, King of Stock commenced to run stock software sale business and sold, as an agent, stock software products including “Stock Pioneer”, “King of Stock I”, “King of Stock II”, “King of Stock III” and “Stock Monarch”. From August 27, 2007, King of Stock made promotions by way of recording its advertisement as a financial commentary program, with the anchor acted by its employee and Ma Yong and Liu Bowei giving lectures in turn as securities analysts. The parties concerned made comments on market trend and individual stock and publicly made suggestions for securities investment. Furthermore, they exaggerated their company’s research capability, and claimed to unveil stocks with immediate bullish potential for several audiences who first dialed the free hotline and diagnose the stocks held by them for free. Apart from that, King of Stock, through relevant companies, signed agreements with network media to make advertisements on them. Through this way, King of Stock attracted TV and network audiences to dial its hotline. King of Stock’s staff replied those dialing the hotline in the same way as the company trained them to widely publicize the astonishing return rate of the stock recommended by the company, shake the clients’ confidence to deal stock by themselves and induce them to purchase the company’s software and services and sign the “Confirmation for Subscription for Product”. After the audiences bought the company’s software and services and became its clients, Kong of Stock offered them securities investment consultancy services through telephone and short messages to instruct them in stock transactions.
The aforesaid illegal facts were proved by relevant TV advertisement agency contracts, TV videos, working recordings of staff, judicial authentication reports, confirmations for subscription for product, short message records, clients’ complaints and notes of inquiry on the parties concerned.
As King of Stock had no qualification for securities investment consultancy business, its aforesaid illegal behaviors violated the provision that “Without permission from the securities regulatory authority of the State Council, no unit or individual shall be allowed to engage in securities business.” in Article 122 of the “Securities Law” and constituted a serious case of illegal engagement in securities business as stated in Article 197 of the “Securities Law”. Since the behavior of King of Stock has been suspected of a crime, the case has been handed over to the public security authority according to the “Regulation on Administrative Enforcement Authority’s Handing over Case Suspected of Crime” (Decree No. 310 of the State Council). Wang Zhongjuan, executive director and general manager of King of Stock, and Sun Sheng, Supervisor of King of Stock, were the senior managers directly responsible for the aforesaid illegal acts.
The involvement in King of Stock’s illegal securities investment consultation by Ma Yong and Liu Bowei, both possessing the qualifications for securities investment consultancy business, violated the provisions in Articles 12 and 19 of the “Interim Measures for Administration of Securities and Futures Investment Consultation” and constituted serious cases.
The main defending reasons related to the aforesaid case proposed by Sun Sheng in his defending opinion are: first, the aforesaid behaviors were conducted without his knowledge as he is not King of Stock’s actual supervisor and does not enjoy a supervisor’s income. Second, the time when he held the position of King of Stock’s business manager is comparatively short. Thus, he requested for a lighter punishment.
The CSRC held that Sun Sheng’s defending reasons were groundless as he failed to provide new evidence for the illegal facts recognized by the CRSC in the prior notice: first, on June 27, 2006, King of Stock’s shareholders’ meeting approved the “Decision on Appointing Supervisor” to appoint Sun Sheng its supervisor, with the term of three years. Sun Sheng, as the party concerned, signed the “Decision”. Therefore, Sun Sheng’s defending reason of “no knowledge” is groundless. Second, King of Stock’s engagement in securities investment consultancy business without permission of the securities regulatory authority of the State Council constituted the illegal engagement in securities business. The illegal proceeds from the illegal acts were huge, with serious damage caused to investors and adverse effects exerted on the order of securities market. The case is serious and suspected of crime. Sun Sheng, in the capacity of supervisor and department manager, participated in King of Stock’s illegal acts in practice. Thus, the CSRC’s decision on permanently banning him from market entry was appropriate according to his function in the aforesaid illegal facts.
According to the facts, nature, circumstances of and the harmful social effects caused by the illegal conducts of the parties concerned, and in accordance with the provisions in Article 233 of the “Securities Law” and Articles 5 and 6 of the “Regulation on Securities Market Entry Banning”, the CSRC ruled as follows:
I. Wang Zhongjuan and Sun Sheng, recognized as persons banned from securities market entry, shall not engage in securities business or hold the positions of director, supervisor or member of senior management of a listed company for a life time from the day when the CSRC announced the decision; and
II. Ma Yong and Liu Bowei, recognized as persons banned from securities market entry, shall not engage in securities business or hold the positions of director, supervisor or member of senior management of a listed company for 5 years from the day when the CSRC announced the decision.
In case of any dissent from the rulings, the parties concerned can apply for administrative review to the CSRC within 60 days from the day upon receiving the decision, or directly file an administrative lawsuit to the people’s court with the jurisdiction within 3 months from the day upon receiving the decision. The aforesaid rulings shall still be executed during the period of review and litigation.
China Securities Regulatory Commission
June 4, 2009