Special topic: penalty landing! The actual controllers of China Nuclear Titanium dioxide, CITIC Securities and Haitong Securities were confiscated by the CSRC totaling more than 2.Fourdeucespoker.300 million

It's only been a week since the case was filed.FourdeucespokerThe investigation of the illegal arbitrage case of China Nuclear Titanium dioxide (rights protection) was quickly completed, and the actual controller of the company and the two leading securities firms were punished administratively.

It is understood that Wang Zelong, CITIC Securities, and Haitong Securities, the real controllers of CNPC titanium dioxide, were confiscated a total of 235 million yuan.

On the evening of April 19th, Citic Securities (600030.SH) and Haitong Securities (600837.SH) issued a notice saying that they had received a "prior notice of administrative punishment" from the China Securities Regulatory Commission.

Both were punished for allegedly violating restrictions on the transfer of 002145.SZ 2023 non-public shares, according to the notice.

In the evening of the same day, Citic Securities responded to the punishment, saying that the company and Sun Company Citic CITIC Capital sincerely accepted the punishment for the problems and penalties identified in the above notice, and would reflect deeply, seriously implement rectification and reform, and draw lessons from others. Comprehensive and systematic investigation of various business management deficiencies, and actively implement regulatory requirements.

On the evening of April 12, CITIC Securities and Haitong Securities simultaneously issued a notice saying that they had received a "notice on file" from the Securities Regulatory Commission, which was related to the private offering of shares by China Nuclear Titanium dioxide in 2023.

The operational details of this increased margin arbitrage are as follows:

From September 2022 to February 2023, Wang Zelong and Han Yuchen agreed with CITIC Securities and CITIC Securities firms to increase the arbitrage business and agreed that 88 million shares of "China Nuclear Titanium dioxide" shares would be lent through the SOE employee stock ownership plan. The shares are allocated to four private equity fund product accounts in accordance with the designated path of CITIC CITIC, and the loan period is extended and renewed until September 2023.

In February 2023, Haitong Securities participated in the first round of non-public offerings of China Nuclear Titanium dioxide in accordance with CITIC's order price and subscription amount, and reached a long income swap linked to "China Nuclear Titanium dioxide" stocks with a nominal principal of 532 million yuan and corresponding shares of 89.8649 million shares, with CITIC providing full margin. On the same day, an investment company reached a vanilla option combination contract with CITIC CITIC Securities, which was linked to the "medium nuclear titanium dioxide" stock.

Interface journalists query Choice data and found that before and after the release of the ban period of titanium white in the core, the margin of margin has changed. Since February 14, 2023, that is, one month before the lifting of the ban, the margin has jumped from the order of magnitude of hundreds of thousands of shares to the order of 10 million. After the date of release of the ban on September 20, the margin has fallen off a cliff and returned to the order of millions of shares.

According to the notice, the first round of non-public offering of titanium dioxide is aimed at 16 specific targets, with an offering price of 5.92 yuan per share. After going through measures such as multi-short swaps, employee stock ownership lending and extension, compared with the closing price of 7.13 yuan per share on March 9, 2023, the discount will be about 20%.

A brokerage person said that "fixed increase + margin" arbitrage refers to the use of discount to obtain fixed increase shares, combined with short selling to form a similar risk-free arbitrage model. However, with the stricter supervision of the two financial institutions at the end of last year, it is difficult to continue the arbitrage after blocking the outflow of securities.

The CSRC said that Wang Zelong participated in a non-public offering through derivatives trading and sold short selling at the market price, locking in earnings in advance, in violation of the relevant provisions of the Securities Law of the people's Republic of China. Citic CITIC Securities, CITIC Securities and Haitong Securities also helped to participate in arbitrage, which was also found to be illegal.

The China Securities Regulatory Commission imposed the following penalties on all parties involved in the transfer of shares in violation of restrictive regulations, and confiscated a total of 77.53 million yuan of illegal income. In this process, Wang Zelong actually made a profit of 60 million yuan, while Citic Securities did not make an actual profit. Citic Securities earned 1.91 million yuan from its margin trading business, and Haitong Securities earned 780000 yuan from income swaps.

The CSRC imposed a total fine of 155 million yuan on all parties involved in the case. Of this total, Wang Zelong assumed 72.5 million yuan, CITIC Securities 46.5 million yuan, CITIC Securities 23.25 million yuan, and Haitong Securities 6.97 million yuan.

Market data show that as of April 19, China Nuclear Titanium dioxide shares were trading at 4.03 yuan per share, down nearly 32% from its fixed price increase in 2023. Citic Securities fell 0.44% to 18.13 yuan per share, while Haitong Securities fell 0.25% to 8.04 yuan per share.

"it can be seen from this incident that any future illegal arbitrage in grey areas will be blocked by regulation." Some senior practitioners commented that the pace of supervision and law enforcement was rapid, and only every other week, the illegal arbitrage case of China Nuclear Titanium dioxide was quickly investigated and dealt with, and the two securities firms and other subjects involved in the case were also subject to administrative punishments, demonstrating the strength and determination of regulation to optimize the ecology of the capital market.