Sofa exporter Zoy, named in pump-and-dump scam, exposes underbelly of China’s US$11 trillion stock market
- Zoy Home Furnishing was named on May 16 by the securities regulator as the subject of an investigation into pump-and-dump price manipulation based on a whistle-blower’s report
- The scam came to light when hedge fund manager Ye Fei wrote that he had been owed 50,000 yuan in fees promised by Zoy for helping to prop up the stock’s prices
The scam came to light when Ye Fei, a hedge fund manager working for Huaibei Yitian Investment, wrote on his Weibo microblog that he had been owed 50,000 yuan in commission promised by Zoy for helping to prop up the stock’s prices. The asset management units of several Chinese state-owned brokerages including Shenwan Hongyuan Group and Minsheng Securities were also involved, playing the warehousing role of locking up the stocks in their portfolio to facilitate the ramping of prices, Ye said.
“We continue to have ‘zero’ tolerance of excesses such as manipulation,” the regulator said in the statement. “We will severely punish by law those who get involved such as actual controllers of listed companies, hedge or mutual funds, and spare no mercy.”
Zoy’s shares plunged 6.6 per cent to 17.28 yuan on Monday after it was named by the regulator, their lowest daily close since the company began trading on the Shanghai exchange in 2018. The stock clawed back some of its losses on Tuesday, rising 3 per cent to 17.80 yuan.
The stock’s price had see-sawed between a record high of 46.77 yuan in April 2019 to a low this year, averaging at 26.67 yuan over three years since its initial public offer (IPO) price of 19.86 yuan in February 2018.