Star fund manager pleads guilty to manipulation
Xu Xiang, a former hedge fund manager, has pleaded guilty to market manipulation, according to a statement by a court in Qingdao on Tuesday. It is one of the most high profile cases since China’s stock market collapse last year.
Qingdao Intermediate People’s Court said that Xu and two co-defendants were accused of conspiring with executives or others with financial control of 13 listed companies from 2010 to 2015 to manipulate share prices and trading volume by using insider information. The highflying Xu was previously known as “hedge fund brother No 1”.
Xu also was accused of using the information to direct the stock trades of some 100 people.
The court said it will announce a verdict on another day
Xu was arrested in November 2015 after police started a nationwide probe into illicit behavior in the stock market, including insider trading, share price manipulation and malicious short selling.
Police froze over $1 billion in shares of listed companies with connections to Xu’s investments, according to exchange filings.
Xu’s Zexi Investment Management Co, a Shanghaibased firm established in 2009, managed four of China’s top 10 performing hedge funds in the first three quarters of last year, according to simuwang.com, a private venture information platform.
The average return of Zexi’s five stock funds has ranked among China’s top three every year since the firm opened five years ago, and yielded gains of 249 percent when comparing prices in January and in September of 2015.
The benchmark Shanghai Composite Index advanced by only 5.6 percent when comparing those months, which span the summer market turmoil that year, according to market intelligence provider Tonghuashun.
The court’s statement said the nearly 100 people whose stock accounts Xu is accused of influencing illegally between 2009 and 2015 included his family members, employees and employees’ relatives.
Between 2010 and 2015, Xu, either alone or with the two co-defendants, is accused of making trades to manipulate prices and trading volumes after buying low from insiders of the 13 listed companies t .hrough block trades, or through buying low before disclosures of important news such as dividends and profits, or before disclosure of private placements of stock. He would then sell when prices rose, the court said.
The executives of 13 companies involved in the case have been charged separately, the court said.