China stock market

Actress Zhao Wei and husband banned from securities markets for five years for ‘fake’ news, CSRC rules

Billionaire actress Zhao Wei, along with her husband, have been barred from China’s securities markets after “misleading the market” over a deal involving a little-known animation studio, the securities regulator has ruled

PUBLISHED : Thursday, 09 November, 2017, 8:20pm
UPDATED : Friday, 10 November, 2017, 4:15pm

Billionaire actress Zhao Wei, along with others, have been barred from China’s securities markets for five years for “seriously misleading the market”, under a ruling handed down by the mainland’s securities regulator, according to company filing on the Shanghai Stock Exchange on Thursday evening.

In addition to Zhao, the ban will also apply to her husband Huang Youlong, and the owner of a company that had been targeted for take over last year, the order by the China Securities Regulatory Commission (CSRC) said, according to a filing by Zhejiang Sunriver Culture.

Sunriver is a Shanghai listed company targeted by the couple late last December. Each individual, along with an executive of the company they controlled, were fined 300,000 yuan (US$45,206), the filing said.

Sunriver was assessed a separate fine of 600,000 yuan.

The CSRC found that Zhao and her company had violated disclosure rules by announcing and playing up merger and acquisition intentions at a time when they lacked sufficient resources, or support from financial institutions, for such a deal, “seriously misleading the market with fake information”, according to the filing.

Zhao’s company, named Longwei Culture & Media, announced it would spend 3 billion yuan to acquire a little-known animation company listed in Shanghai in December last year.

By early February the company announced it would abandon the bid for a controlling 29 per cent stake after regulators issued letters seeking additional information on the deal and banks refused requests for financing.

According to earlier filings, a company called Tibet Yinbixin Asset Management, had agreed to provide a credit line of 1.5 billion yuan to Zhao for the acquisition. The company had been connected with investment by companies linked to the missing tycoon Xiao Jianhua, mainland media Jiemian reported in January.

Longwei Culture & Media was established on November 2, 2016, one month before the acquisition deal was announced. The company was set up with an unfunded capital claim of 2 million yuan, no assets, revenue or profit, according to the letter issued by the CSRC to Sunriver.

Under the proposed share transfer agreement at the time, Longwei would offer 60 million yuan in cash, while the remaining 80 per cent of the 3 billion yuan would come from borrowed money.

Longwei also failed to disclose financing details to the regulator when requested, the CSRC letter said.

Liu Shiyu, chairman of the CSRC, also a rising political star who was elected last month as a member to the Central Committee at the 19th Party Congress, has reiterated the need to safeguard financial stability with having zero tolerance for capital market manipulators.

In February Liu pledged that the regulator would continue to look into dubious takeover deals involving “barbarians, monsters and big crocodiles”.

Xiao, 46, a well-connected billionaire and founder of Beijing-based Tomorrow Group, disappeared from his suite at the Four Seasons Hotel in Hong Kong in late January. Sources said he was “assisting investigation somewhere in the mainland”.

Xiao and his wife Zhou Hongwen ranked 32nd on the Hurun China Rich List 2016, with US$5.97 billion in wealth.