25

2019

-

06

Can Party members and cadres actually speculate in stocks? The authoritative response has arrived! These 7 'red lines' must not be touched

Can Party members, cadres, and staff of Party and government agencies invest in stocks? Recently, the Central Commission for Discipline Inspection has made a clear statement - yes! I have given these special "shareholders" reassurance. However, stocks can be traded, and there are seven "red lines" that must not be touched! Otherwise, the consequences will be serious. Come and see what they all say.


Can Party members, cadres, and staff of Party and government agencies invest in stocks? Recently, the Central Commission for Discipline Inspection has made a clear statement - yes! I have given these special "shareholders" reassurance. However, stocks can be traded, and there are seven "red lines" that must not be touched! Otherwise, the consequences will be serious. Come and see what they all say.

 

Who is subject to disciplinary constraints in "stock trading"?

What are the constraints based on?

First, the Regulations of the CPC on Disciplinary Punishment shall apply to Party members and cadres, that is, cadres who are members of the CPC;

 

The second is the staff of party and government organs, which refers to the staff of party organs, people's congress organs, administrative organs, CPPCC organs, judicial organs, and procuratorial organs. Public institutions managed according to the civil service system, enterprises and public institutions with administrative management and law enforcement functions, as well as staff members in mass organizations such as trade unions, Communist Youth League, women's federations, literary and artistic federations, workers' associations, and science and technology associations; Workers in public institutions affiliated with various levels of party and government organs, trade unions, Communist Youth League, women's federations, literary and artistic federations, workers' associations, science and technology associations, and other mass organizations. Applicable to the "Several Provisions on Personal Securities Investment Behavior of Party and Government Personnel".

 

On June 24th, the website of the Central Commission for Discipline Inspection and the National Supervisory Commission pointed out that the securities market is an important component of China's socialist market economy system. Party and government officials invest their legitimate assets in the securities market in a legal manner, which is support for national construction. Party members and cadres can engage in legitimate securities trading activities, but they cannot violate relevant regulations.

 
 

Which "red lines" cannot be touched?

The seven red lines should not be touched, please remember

The securities market is an important component of China's socialist market economy system. Party and government officials invest their legitimate assets in the securities market in a legal manner, which is support for national construction. Party members and cadres can engage in legitimate securities trading activities, but they cannot violate relevant regulations. The Regulations on Disciplinary Punishment of the CPC and Several Provisions on Personal Securities Investment Behavior of Party and Government Organs have drawn a red line for the securities investment behavior of party members and cadres. Party members and cadres should remember not to commit the following behaviors——

 

1. Receipt and delivery of securities and equity

 

Article 88 and Article 89 of the Regulations on Party Disciplinary Measures have made clear provisions on the illegal receipt and delivery of securities, equity, other financial products and other property, as well as the applicable penalties, which were also added in the latest revision of the regulations.

 

In reality, such cases are not uncommon. For example, Li Lei, former director of the Energy and Circular Economy Department of the Shenzhen Development and Reform Commission, "does not accept cash or equity". He repeatedly used his position to help the company successfully apply for government support funds and government investment projects. Afterwards, he purchased original shares at a low price from relevant companies or directly received dry shares, and carefully designed to be held by bribing individuals or family and friends, ultimately earning millions of yuan. Li Lei was sentenced to six years in prison and a fine of RMB 800000 for the crime of bribery.

 

2. Illegal possession of shares in non listed companies

 

Generally speaking, owning shares or securities of non listed companies (enterprises) is essentially a business enterprise. Article 94, Paragraph 1 of the Regulations on Party Discipline Punishment lists it as an act of engaging in profit-making activities in violation of relevant regulations, and provides for corresponding punishments.

 

In recent years, investigation and punishment cases have shown that many fallen cadres, even "big tigers", have the problem of "illegally holding shares in non listed companies", such as Li Chengyun, former deputy governor of Sichuan Province, Ji Xiangqi, former deputy governor of Shandong Province, Song Wenxuan, former party secretary and chairman of Shandong Rural Credit Union, Xu Zuxie, former deputy director of Hangzhou Municipal People's Congress Standing Committee, and Liu Jianli, former party member of Tangshan Municipal Government in Hebei Province, Wang Yongzheng, former member of the Standing Committee and Minister of Propaganda Department of Tai'an City, Shandong Province, and Xiao Zhenyu, former Secretary of the Party Group and Director of the Guangzhou Municipal Commission of Commerce, among others.

 

3. Illegal investment and shareholding in foreign countries

 

Some party members and leading cadres who hold certain powers, in order to avoid the policies and regulations of the party and the state prohibiting party members and leading cadres from engaging in business and running enterprises, register companies or invest in stocks abroad to obtain personal interests.

 

For example, Zhang Jushi, former director of Shaoxing Traditional Chinese Medicine Hospital, used his position to facilitate illegal business operations, buying and selling stocks, and investing in stocks abroad from 2007 to 2015. Zhang Jushi was expelled from the Party and from public office, and was transferred to the judicial authorities for legal treatment.

 

4. Insider trading or disclosure of insider information

 

Article 94 of the Party Discipline Punishment Regulations has added punishment provisions for behaviors such as "buying and selling stocks using information obtained from decision-making and approval processes such as participating in enterprise restructuring and restructuring, targeted issuance, merger and investment, and land use right transfer". This is summarized from typical cases investigated and punished since the 18th National Congress of the Communist Party of China.

 

If it constitutes the crime of insider trading or the crime of using non-public information for trading as stipulated in the Criminal Law, it shall be dealt with in accordance with the provisions of the General Provisions on Disciplinary Law. As of now, among the provincial and ministerial level cadres, Yao Gang, former Vice Chairman of the China Securities Regulatory Commission, Ma Jian, former Vice Minister of the Ministry of National Security, Chen Shulong, former Vice Governor of Anhui Province, Zhou Chunyu, former Vice Governor of Anhui Province, Wang Xiaoguang, former Vice Governor of Guizhou Province, and Bai Xiangqun, former Vice Chairman of Inner Mongolia Autonomous Region, have been prosecuted or sentenced for insider trading or leaking insider information.

 

5. Public funds or illegally borrowed funds for stock trading

 

Some purchase stocks and securities investment funds by borrowing public funds from their own units, borrowing funds from management and service recipients, or borrowing funds from units and individuals within their jurisdiction or related to their exercise of authority.

 

For example, from July 2001 to January 2008, Sun Xin, the former cashier of the Planning and Finance Department of the Beijing Municipal Press and Publication Bureau and a member of the "Hongtong Personnel," utilized his position to transfer over 22 million yuan of public funds from the unit to his personal securities account under his control for securities trading, of which 18.0272 million yuan was not returned.

 

Sun Xin fled in March 2008 and was arrested and escorted back to China in June 2015. Later, he was sentenced to 14 years and 6 months in prison and fined 200000 yuan by the court for both embezzlement and embezzlement.

 

6. Concealing personal shareholding information

 

Reporting personal matters according to regulations is a serious organizational discipline. Some party members and leading cadres treat personal matters as "privacy" and hide them, neither confiding nor disclosing them.

 

For example, in January 2019, the Discipline Inspection Commission and Supervision Commission of Baoding City, Hebei Province reported that Feng, a member of the party group of the water conservancy bureau and director of the urban water system management office, violated organizational discipline and concealed information such as funds, stocks, and investment insurance held by himself and his spouse when filling out the "Report Form on Personal Matters Related to Leading Cadres" in 2017 and 2018. Feng was given a serious warning within the party.

 

7. Specific groups buying and selling stocks

 

The "Several Provisions on Personal Securities Investment Behavior of Party and Government Personnel" clearly lists four categories of people who cannot speculate in stocks:

 

(1) Individuals, their parents, spouses, children, and their spouses who hold insider information in the supervisory departments of listed companies and state-owned holding units of listed companies are not allowed to buy or sell the stocks of listed companies managed by the aforementioned supervisory departments.

 

(2) The securities regulatory agency of the State Council and its dispatched agencies, as well as the staff of stock exchanges and futures exchanges, as well as their parents, spouses, children, and spouses, are not allowed to buy or sell stocks.

 

(3) If my parents, spouse, children, and their spouse work in securities companies or fund management companies, or work in accounting (auditing) firms, law firms, investment consulting institutions, asset evaluation institutions, or credit evaluation institutions authorized by the securities regulatory authority of the State Council for securities and futures practice, the staff of the party and government organs shall not buy or sell the stocks of listed companies that have business relations with the aforementioned institutions.

 

(4) Party and government officials who have access to insider information shall continue to be bound by this regulation within three months of leaving their positions. Party and government officials who hold insider information due to their new positions must handle the stocks and securities investment funds they already held before taking office within one month after taking office and may not continue to hold them.