Case Concerning the Manipulation of the Securities Market of Zhao XX and Others
(SPP Guiding Case No. 222)
Key words
Manipulation of the securities market; Private equity funds; Over-the-counter options; Illegal gains
Summary
In handling cases involving the manipulation of the securities market through private equity funds, the people's procuratorates shall conduct a full-chain review of the source, use, and destination of the fund's capital flows, with particular attention to whether the conduct violates the relevant regulations on fund supervision and administration, so as to accurately ascertain the facts at each stages of the scheme. It is essential to distinguish between transaction-based manipulation and information-based manipulation, and to accurately apply judicial interpretations regarding "serious circumstances" and "especially serious circumstances". Conduct involving coordinated trading between stock manipulation and the buying or selling of over-the-counter options does not constitute the crime of manipulating the futures market. However, any profits derived from such conduct shall be regarded as cross-market illegal gains arising from securities market manipulation and shall be recovered in accordance with the law.
Relevant provisions
Article 182 (1) of the Criminal Law of the People's Republic of China (Rev. 2006) (now Article 182 (1) of the Criminal Law of the People's Republic of China)
Article 272 (1) of the Criminal Law of the People's Republic of China (Rev. 1997) (now Article 272 (1) of the Criminal Law of the People's Republic of China)
Article 4 (1) of the Interpretation by the Supreme People's Court and the Supreme People's Procuratorate of Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving the Manipulation of the Securities and Futures Market (Interpretation Decree. 9 (2019) of the Supreme People's Court)
Article 39 (1) of the Provisions (II) of the Supreme People's Procuratorate and the Ministry of Public Security on the Standards for Filing Criminal Cases under the Jurisdiction of the Public Security Organs for Investigation and Prosecution (No. 23 (2010) of the Ministry of Public Security) (Now Article 34 (1) of the Provisions (II) of the Supreme People's Procuratorate and the Ministry of Public Security on the Standards for Filing Criminal Cases under the Jurisdiction of the Public Security Organs for Investigation and Prosecution shall apply) (No. 12 (2022) of the Ministry of Public Security)
