Red Star Capital Bureau, 10 18: Recently, the Shanghai Securities Regulatory Bureau announced Administrative Penalty Decision No. Hu [2] 38, imposing penalties on Yun, a research analyst at an insurance asset management company's research department, for trading based on undisclosed information (commonly known as "rat trading"). The penalty orders the illegal disposal of securities held in violation of the law and imposes a fine of 50 million yuan. The case spanned 3 years and 8 months. Despite resulting losses from convergent trading and no illicit gains, the 50 million yuan fine represents the minimum level within the statutory penalty range.
▲ Screenshot of the Shanghai CSRC Official Website
The penalty notice indicates that Yun, female, born in 197X, works as a researcher in the research department of an asset management company. She served as the portfolio researcher for the investment portfolio involved in the case and was responsible for its investment decisions, among other duties. She had access to non-public information regarding the portfolio's holdings and transaction details. The asset management company holds an insurance license.
Between 2022 and 1, Yun controlled two Everbright Securities accounts under the names "Huang Mouju" and "Zhu Mouxiang," using non-public information obtained through their position to conduct securities transactions that converged with the portfolio in question, either independently or by instructing others (explicitly or implicitly). These convergent trades resulted in losses. The primary source and destination of funds for these accounts were Yun and their spouse.
Ultimately, the Shanghai CSRC determined that Yun's actions violated Article 54, Paragraph 1 of the Securities Law and constituted an illegal act as described in Article 191, Paragraph 2 of the Securities Law. Pursuant to Article 191, Paragraph 2 of the Securities Law, individuals who trade using undisclosed information with no illegal gains or with illegal gains under 500,000 RMB shall be fined between 500,000 and 5,000,000 RMB. Since there were no illegal gains in this case, the penalty was set at the lower end of the range.
Insurance asset management companies are other financial institutions as referred to in this Article. Employees of such companies who use their positions to obtain non-public information for trading shall be subject to this Article.
What drew attention is that the punished party's title was Researcher, yet the penalty decision shows that Yun was actually responsible for investment decisions and other duties related to the portfolio in question. In standard market practice, investment decisions fall under the fund manager's authority, while a researcher's core role is to provide research support.
A Shanghai-based asset management executive noted that under the industry-standard framework for separating investment research and portfolio management, fund managers are responsible for making investment decisions while analysts provide decision support. This is the standard arrangement at most asset management firms. However, in some smaller asset managers' investment-research structures, analysts do play a deep role in investment decisions.
It is important to clarify that regulatory determination of "access to non-public information" does not hinge solely on whether the individual has authority to execute trade orders. The core criterion is whether they leveraged their position to gain access to internal information such as portfolio holdings or trading plans, rather than simply considering job titles or order-execution permissions.
Another industry professional added that while the public mutual fund sector has a relatively standardized division of investment research responsibilities, other licensed asset management fields such as insurance asset management, securities asset management, and bank wealth management feature more flexible organizational structures. In these areas, it is not uncommon for a single individual to handle all aspects of investment and research. Meanwhile, roles within proprietary trading lines have even more diverse divisions of responsibility. Even if a position is nominally titled "Research Analyst," once the individual substantively participates in portfolio investment decisions or gains access to holdings and trading plans, they fall under the regulatory scope of the Securities Law concerning insider trading based on undisclosed information.
(This article does not constitute any investment advice. Proceed at your own risk.)
Edited by Yang Cheng, Guo Zhuang; compiled from Lianhe Finance, Shanghai Securities News, and public sources.
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