Strengthening Insider Trading Prevention and Control M & A Reorganization Reasonable Recovery
Although the unbundling of M & A and restructuring policies has continued since the second half of last year, the supervisors have also continued to strengthen their reporting and crack down on insider trading.
Analysts point out that M & A and restructuring has always been a high-prone area for insider trading. Data show that the number of cases of insider trading in M & A and restructuring in 2018 increased by 30% compared with 2017.
The issue “Related Issues and Answers on Strengthening the Prevention and Control of Insider Trading in Listed Companies’ M & A and Reorganization” recently announced that it is necessary to clearly report the insiders in multiple stages to comprehensively strengthen the prevention and control of insider trading in mergers and acquisitions.
A few people said that the supervision and strengthening of brokers and other intermediaries’ consciousness of responsibility should be adopted, and the capital market door should be kept well. It is expected that the M & A and restructuring market will focus more on emerging emerging industries such as high-end manufacturing in the future and further return to the origin of M & A.
The high-incidence zone of insider trading On February 13, the CSRC announced the results of Xinri Hengli’s merger and reorganization insider trading case, which totaled 1,794 million in fines.
In 2015, the listed company Xinri Hengli planned to pass the merger and acquisition of Boya stem cells and date the biological business sector.
In fact, the controller Yu Jianming leaked information to the husband and wife of a bank president Li Fu who had known each other for many years during the company’s planning of the merger and acquisition project. The couple then used inside information to buy and sell Xinri Hengli stock, which ultimately constituted insider trading and actually made a profit of 448.
In fact, M & A has always been a high-frequency area for insider trading.
The China Securities Journal reporter combed the council and the local securities regulatory bureau’s announcement and found that in December 2018 alone, the regulator issued a series of five administrative possible decisions involving multiple stocks in response to insider trading in M & A and restructuring matters.
M & A and reorganization matters 北京会所体验网 have a long planning cycle, involve a wide range of areas, and have a significant impact on the market. They can easily become a tool for illegal actors to seek improper benefits.
The “2018 Summary of Administrative Intervention of the Securities Regulatory Commission” issued by the Securities and Futures Commission in January 2019 states that in 2018, the Securities and Futures Commission turned into 87 cases of breach of insider trading cases, of which 57 involved inside information related to asset mergers and acquisitions.This shows that this area is still a high incidence of insider trading.
The Securities Regulatory Commission pointed out that a series of insider trading cases involving “Han Ding Yu You”, “Chang Ying Precision”, and “Shilan Micro” all exhibited the characteristics of “whole case”, focusing on the information about the merger and reorganization of the same asset, and some insiders were informed.People despise professional ethics, abuse information advantages to deliberately infringe on investors’ legitimate rights and interests, and some related persons have used special relationships or contacts with insiders to obtain inside information illegally in an attempt to obtain illegal benefits, and they have been severely punished according to law.
Mo Yichen (a pseudonym), the head of securities-related business of CITIC Construction Investment, told the China Securities Journal that the difficulties in cracking down and preventing insider trading are: First, the decision-making process of listed companies’ mergers and acquisitions and reorganizations is long, there are many re-examinations, which involve a wide range of issues, and it is easy to reorganize information.highest.
According to the latest new rules on suspension and resumption of trading, a listed company planning to issue shares to purchase assets may apply for a short-term suspension of trading based on actual conditions for a period of no more than 10 trading days.
However, in actual operation, M & A transactions need to coordinate the transaction target, counterparties, intermediaries, regulators and other multi-entity entities, and the news may have occurred by the time of suspension.
Second, the legal system of some relevant insiders is weak, and the reorganization can’t keep the temptation. It is easy to produce insider trading.
Strengthening Insider Trading Prevention and Control In order to further strengthen the risk prevention and control of insider trading, the “Supervisory Questions and Answers”
issued by the Securities and Futures Commission on February 11 pointed out that listed companies can submit a list of insiders who know inside information to the securities issue at the first reissue.
The previously disclosed first reorganization event refers to the first disclosure of the planned reorganization, reorganization plan or reorganization update report (early morning).
Significant adjustments to the reorganization plan between the announcement of the re-issue of the reorganization of the listed company for the first time and the supplementary update report, termination of the reorganization, or the disclosure of the major financial indicators, forecast values, and pricing of the underlying assets of the subject matter for the first time of repeated issuance should be supplementedWhen major changes in the reorganization plan or important elements are disclosed, the list of insiders who submitted inside information will be supplemented.
In the event that a listed company’s stock transaction changes abnormally after the first re-issue of the reorganization, the stock exchange may request the listed company to update the list of insiders with inside information, as appropriate.
The “Supervisory Questions and Answers”
also pointed out that listed companies should disclose inside information in the supplementary report to the insider ‘s self-examination report on stock trading; during the self-inspection on stock trading, the issue was the first reissue or the stock suspension was applied for this reorganization (early morning)As for the monthly update report.
After the listed company copied the reorganization report, it made major adjustments to the reorganization plan, terminated the reorganization, and supplemented the self-examination report on the stock transaction; during the period of the stock transaction self-examination, the report was copied to the major adjustment or the reorganization was terminated.
”Information for insiders has been there before, and it has always been strict.
Li Ming (a pseudonym) from a securities brokerage investment bank in the South told a reporter from China Securities Journal that the supervision clearly states that insiders are reporting in multiple stages, which is a new form of supervision brought about by the new suspension system. The core point is still the supervision ofThe suspension of resumption involved in M & A and restructuring matters remains a major concern.
Li Ming said that according to the latest regulatory requirements, listed companies can no longer suspend trading randomly, and the suspension time is shorter than before. In this case, the risk of reducing inside information has actually increased.
Therefore, the supervision of the informed phased reporting by the insiders is a supplement to the new suspension and resumption system to a certain extent.
China Securities Journal reporters have learned that securities companies have always taken precautions against insider trading during the implementation of the project. After the restructuring and suspension rules have been changed, the prevention of defense has increased to a certain extent, but the securities companies are also actively responding to the new rules to further increase their prevention efforts.
Mo Yichen pointed out that the refinement of the regulatory requirements has further clarified the scope and period of insider transaction verification, making the verification of securities firms more evidence-based, reducing related burdens, facilitating work performance, and preventing insider transactions.Acts such as counterattack flickering reorganization can play a positive role.
As financial advisors, securities firms should, under the guidance of relevant regulatory regulations, strengthen the preaching of M & A restructuring participation and its related personnel in accordance with the seriousness of insider trading and its precautionary measures, and at the same time further increase the verification efforts to prevent related risks to the greatest extent.
”At the source of the project, the securities firm should have a deep understanding and approval of the merger and acquisition strategy of listed companies, screen projects based on the commercial nature of mergers and acquisitions transactions, and resolutely resist flicker and follow-up restructuring.The first line of defense.
Mo Yichen is outstanding. Securities companies should establish a sound internal risk control system, play the role of “gatekeeper” in the securities market, transition compliance management to project approval, and move from core to external submission of materials to ensure the project.Successful implementation.
In addition, strategic industries should pay more attention to high-growth energy-saving and environmental protection, information industry, bio-industry, new energy, new energy vehicles, high-end equipment manufacturing and new materials.
The rational pick-up in the M & A market Preliminary sources said that since the second half of 2018, the M & A and restructuring business has gradually loosened, the pace of review has accelerated, and the mitigation measures to replace private enterprises have been implemented, and the M & A market has shown a warming trend.
”Now the enthusiasm for corporate mergers and acquisitions has clearly increased, but unlike the previous wave of mergers and acquisitions, this round of mergers and acquisitions market will gradually return to rationality.
“Mo Yichen frankly stated that as an important model of outreach development of enterprises, the future M & A market will be gradually supported by the logic of industrial mergers and acquisitions. Listed companies will promote industry integration and transformation and upgrading through market-based mergers and acquisitions, which will generate new points of performance growth.
In addition, in the current round of mergers and acquisitions, the reorganization and listing may be heated.
According to Wind information statistics, from the perspective of industry classification, in the major asset reorganization transactions disclosed for the first time in 2018, there were 27 computer, communications and other electronic equipment manufacturing industries with a transaction value of 900.6.7 billion households, accounting for 11.
59%, ranking first. M & A and reorganization are clearly concentrated in the real economy and emerging industries.
Obviously, the resurgence of mergers and acquisitions and restructuring does not mean that the policy is fully relaxed.
Mo Yichen said that the supervisory authorities still have “untouchable red lines” when reviewing projects, and there is still no room for relaxation in situations such as insider trading and high goodwill.
Chen Yue (pseudonym), an M & A staff member of a listed securities investment bank’s investment bank, said that while the policy has a certain impact on business development, it is not all.
After all, the M & A business is still a market-oriented transaction, and the main influencing factor is the change in market sentiment.
China Securities Journal reporter learned from the director of a listed company that the company planned a short merger and acquisition project just recently approved, and also encountered a difficult situation midway through.
In particular, in order to pay the transaction price, the company’s actual controller will pledge the shares held by the company’s shares. After that, the secondary market continues to decline. The company is expected to go down one after another.The issue is under regulatory attention.
However, there are also brokerage firms saying that there are obvious market improvement indicators. One of the important factors is that the commission rates of financial consultants are generally low.
“With cash transactions of less than 1 billion, the commission income is basically around 10 million. It may even happen, but the workload and difficulty have not decreased.
“Chen Yue revealed that the commission rate for the cash acquisition business has been reduced to about 1%. The high fees are for projects involving stock swaps and matching funds, because only financing fees can be involved.
Zhu Bin, chief analyst of the new third board of Anxin Securities, said that in 2018, the completion of mergers and acquisitions of third board companies by listed companies reached US $ 30.8 billion, and cash payments became the mainstream method. The proportion of pure cash acquisitions was as high as 76%.
However, it is gratifying for the investment bank of the securities firm that according to Winddata, although the proportion of cash mergers and acquisitions in all mergers and acquisitions in 2018 is still 69%.
9%, but the proportion of shares issued to purchase assets increased slightly to 12.
3%, the proportion of “cash + equity” also rose slightly to 9.
Zhu Haibin pointed out that since the second half of 2018, the CSRC has successively introduced a number of favorable policies for mergers and acquisitions and reorganizations to support the increase in mergers and acquisitions reorganization efforts and increase efficiency.
Stimulated by the M & A policy, the appropriate use of equity + cash acquisition methods by companies can greatly improve the efficiency of M & A if they can meet the requirements of “small fast”.
However, what needs to be noticed in 2019 is that the overall capital market environment is weak, followed by the accumulation of goodwill issues of listed companies, resulting in increased pressure on the M & A companies.