The China Securities Regulatory Commission (CSRC) recently published its achievements in investigating and cracking down on "insider trading" in the stock market. According to their report, a total of 375 clues were investigated and 142 cases were filed from the second half of 2013, up 21% and 33%, respectively, compared with the same period of the previous year. Up to now, 3 agencies and 125 people (including a professor from a university in Xiamen) involved in insider trading cases have been detained by the police.
In 2013, the Xiamen Yinrun Investment Company and the Ganzhou Chenguang Rare Earth Company decided to restructure their companies and hired a consultation company - the Gaoneng Investment Company - to help them with restructuring. An employee of the Gaoneng Investment Company, Chen, then got the information about the 2 companies’ restructuring and told his teacher, Lin, a professor teaching investment theory at a university in Xiamen. Lin realized immediately it would be a good chance to make big money so he invested RMB 9.9 million to buy stocks of the Xiamen Yinrun Investment Company, which raised in value to RMB 16.2 million in a few days.
As a stock expert who is very familiar with the laws of the bond market, Lin clearly knew his action was illegal. To avoid risks, Lin was very careful when purchasing the stocks: he changed the IP address of his computer and all of the statistics in his computer. He also asked a dozen friends and relatives to help him open accounts or lend accounts to him. Still, the huge amount of his investment drew the attention of the CSRC, who arrested him after a 4-month-long investigation.