The Qingdao Intermediate People’s Court announced the ruling on its Weibo page (in Chinese) on Monday, while the penalty amount was reported by mainland media Caixin, citing anonymous sources.
In the same announcement, Wang Wei and Zhu Yong, each from different investment firms, were also sentenced and fined for market manipulation. All have pleaded guilty and accepted the ruling, the court said.
The court found that during 2010 to 2015, Xu either acted alone or collaborated with Wang and Zhu to conspire with the presidents or controlling shareholders of 13 listed companies to use inside information and deliberately announce news to boost stock prices.
“Xu and Wang made use of the news and used fund products or securities accounts to execute a series of trading transactions and fiddle with the stock price,” the court statement said, adding that company shareholders, who profited from selling the stocks, would share the gains with them.
“The amount of money involved and the illicit gains are especially huge, while the circumstances are in particular serious,” the court statement said, without disclosing the amount of money involved.
According to a Caixin article, the three defendants pocketed RMB 7bn ($1.02bn) from the trades by leveraging RMB 40bn of capital. The three altogether will pay a fine totaling RMB 12bn, a record for individual economic crimes in China – RMB 11bn for Xu, RMB 1bn for Wang and RMB 50m for Zhu, it noted. But the article was removed from the website a day later.
Xu, the founder the Zexi Investments known for the top performance of its hedge funds, made the headlines in November 1 2015 when the police blocked the whole expressway in Ningbo, Xu’s hometown, to seize him. A photo of Xu under arrest in a white suit was widely circulated in social media.
The high profile takedown of Xu followed the stock market crash in summer 2015 which vaporized $5trn.
