Liable person: Ye Zhigang, male, born in April, 1974, a former chief analyst of machinery industry at Haitong Securities Co., address: No.22 Lane 383, Yu Shan Road, Shanghai.
Pursuant to the Securities Law of the People's Republic of China（hereinafter referred to as the Securities Law）, CSRC conducted investigation and review on Ye's alleged case of market manipulation. Ye has been informed of the fact, reason and basis for the ban, as well as his legal rights. He made a statement and defense, without requesting hearing. The case is already closed after investigation and review procedures.
The disciplinary action follows an investigation which found that:
Ye began to work at the Research Institute of Haitong Securities Co. in January, 2006. In April, 2008, Ye was appointed as the Chief Analyst (Level 5) at the Research Institute, responsible for writing research reports on machinery industry. According to the due procedure at Haitong Securities Co., research reports, after being reviewed, are sent to clients via email. Potential recipients include staff at Haitong Securities Co., domestic institutions like fund management companies and insurance companies, and individual clients. From September, 2006 to April, 2009, Ye purchased shares he recommended via his personal securities account and accounts of Liu and Ren under his control, before his reports were sent to clients. These shares include G Mechanical & Electrical, XGMA, Zoomlion, HEAG, Yunnei Power, ST Zhongding, Xinmao Science & Technology, Zhongding Holding, Zongshen Power, SMEIC, Keda Industrial, ShanTui, etc. Then he sold those shares after the report were sent, to make profits from such moves.
Ye claimed in his defense that, he took stakes in Xi'An Aircraft International on April, 19, 2007, but sold them before Haitong Securities Co. released his research report on Xi'An Aircraft International. He bought shares of XCMG through February, 7 to 9, 2007, after which Haitong Securities Co. published the research report written by Ye. However, he did not provide ratings on the stock, nor intentionally recommend such stock to investors. Thus, those two transactions shall not be deemed as illegal. Ye also raised objections against the calculation of illegal proceeds from the shares remained unsold.
CSRC concludes Ye did not have an obvious attempt to fool investors into trading the shares of XCMG and Xi'An Aircraft International. Thus his transactions in those two stocks constitute a minor offence, and the relevant profits are not deemed as illegal income. After verification, Ye's illegal income totals at 325,787.19 RMB yuan.
Pursuant to Article 203 of the Securities Law, CSRC has already reached a decision to enforce an administrative sanction on Ye, based on the fact, nature, details and social implication of his case. Meanwhile, since Ye's conduct seriously abused the law, thus causing significant social consequences, according to Article 233 of the Securities Law and Article 3 and 5 of the Provisions on Banning the Entry into the Securities Market, CSRC decides to ban Ye from entering the securities market or acting as director, supervisor, or senior manager of any public company for 5 years, effective from the announcement of such decision by CSRC.
In the case of disagreement, the person accused can file for administrative review with CSRC within 60 days after receiving this decision, or initiate an administrative litigation with the People's Court in the jurisdiction within 3 months after receiving this decision. The decision remains valid during the review and litigation period.
China Securities Regulatory Commission
January, 21, 2012