[Lawyer Wang] The defendant in this case holds an important position at the China Securities Regulatory Commission and a large state-owned securities firm. He took advantage of his position to seek benefits for the client and accepted financial products, low-price housing and oth

[Lawyer Wang]

The defendant in this case holds important positions at the China Securities Regulatory Commission and a large state-owned securities firm. He took advantage of his position to seek benefits for his clients and accepted financial products, low-price housing and other property interests, which constituted the crime of accepting bribes. l2; As a person with insider information in the securities market, if he buys or sells securities before the issuance and trading of securities or other information that has a significant impact on the price of securities has not been made public, and the circumstances are serious, he shall be guilty of insider trading. The court ruled that several crimes should be punished concurrently.

The court made a ruling: Several crimes were punished concurrently. The defendant was sentenced to death with a two-year suspended execution, deprived of political rights for life, and confiscated all personal property.

This case involves an detail issue regarding the sensitive period of insider information.

The "Judicial Interpretation of Insider Trading" issued in 2012 stipulates the time when insider information occurs and is formed. Specific to the mergers and acquisitions and reorganization cases involved in this case, the reorganization matter is one of the "major events" listed in the "Securities Law". Therefore, the time when it occurs is the starting point of the sensitive period for inside information, that is, the key people who influence the formation of the reorganization matter (motion, planning, decision-making or execution personnel), and the key point in time when it is actually initiated (the initial time of motion, planning, decision-making or execution). Under normal circumstances, the starting point of the sensitive period for insider information is when the key figures on both sides of the reorganization initially reach a deal agreement. The topic section below

is about the determination of the bribery nature of interest-free loans.

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[Case Facts Summary ]

(1) Questions about whether the defendant is guilty of bribery

1. The defendant Xiao used his As a member of the M&A and Reorganization Review Committee of , a listed company under the China Securities Regulatory Commission, facilitated the backdoor listing of companies controlled by Wei. Wei, in turn, allowed the defendant to obtain huge property benefits from wealth management products in the name of "subscription in the name, but actually as a gift." The relationship between the two parties has an extremely obvious nature of power-for-money transactions.

2. During the period when the defendant was the general manager of Galaxy Securities, Galaxy Securities served as the sponsor and lead underwriter of Yicheng Company’s additional issuance of shares, raising nearly 1.2 billion yuan for its company. Yicheng Company sold the properties developed by it to the defendant at prices significantly lower than the market price, which was a disguised transfer of benefits. The improper benefits obtained by the defendant were directly causally related to his position.

3. As a state employee, the defendant took advantage of his position to seek benefits for his clients and accepted bribes, which constituted the crime of accepting bribes, and the circumstances were particularly serious.

(2) Questions about whether the defendant committed the crime of insider trading

1. The defendant used his position to illegally obtain inside information about the reorganization of Beijing Chemical Corporation, instigating others to build positions at low prices during the price-sensitive period, and then sold them to obtain huge illegal profits;

2. Defendant argued that made its own investment judgment based on ’s public share reform policy . However, the court believed that its investment behavior was extremely purposeful, and the objects, time periods, and amounts of transactions were extremely concentrated and clear. Obviously, it could not be based on general information in the market, and its defense had no factual basis.

[ special topic ]

Identification of the crime of bribery and determination of the amount of bribery

At present, the law and judicial interpretation do not clearly stipulate whether national staff borrowing from the trustee interest-free can constitute the crime of accepting bribes, nor does it provide for the calculation method of the amount of bribery during the loan period. The judicial circles have different views on whether interest-free borrowing constitutes the crime of bribery and the calculation of the amount of bribery:

1. Whether it constitutes the crime of bribery

(1) The exempted loan interest is not "property" in the bribery crime.

The "Interpretation on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Corruption and Bribery" stipulates: "'Property' in bribery crimes includes currency, items and property interests. Property interests include material interests that can be converted into currency, such as house decoration, debt relief, etc., and other benefits that require payment of currency, such as membership services, travel, etc...." This judicial interpretation only stipulates that debt exemption cases are property interests, but the exemption of loan interest is not equivalent to the exemption of the debt itself.

(2) The exempted loan interest belongs to the "property" in the bribery crime.

The property interests in bribery should be interpreted based on their essence, that is, whether they are material interests as understood by ordinary people, and should not be too limited to the relevant provisions of judicial interpretations.

1, " United Nations Convention against Corruption " defines bribery as " improper advantage " and is not limited to "property". In October 2005, my country's National People's Congress Standing Committee reviewed and approved the convention.

In April 2016, the Interpretation of Corruption and Bribery further clarified the scope of "property", including currency, items and property interests.

2. The essential feature of bribery crime is power-for-money transaction, and the exempted loan interest is the subject of power-for-money transaction.

uses to examine the reasons for the interest-free loan of , the loan amount (IOU), the loan period (long-term) and other factors. If it is not consistent with common sense, it can support the fact of bribery crime.

2. Specific calculation of the amount of bribes

(1) Different opinions on determining the borrowing interest rate

1. The borrowing interest rate should be determined with reference to the interest rate of the briber lending to external parties during the borrowing period;

2. The borrowing interest rate should be determined with reference to the average borrowing interest rate agreed between the briber and others;

3. The borrowing interest rate should be determined with reference to the basic loan reference interest rate calculated and published by the National Interbank Lending Center. can ensure that similar cases are handled more authoritatively and fairly, and similar cases are judged the same.

(2) Opinions on the determination of loan period

The starting date of the loan period is confirmed by the date when the funds arrive in the briber's bank account and come under his control and control. As for how to determine the termination date of the loan, there are mainly the following opinions.

1. Referring to civil and commercial cases, the actual repayment date is regarded as the termination date, but the amount of bribery cannot be determined at the trial stage, making it difficult to convict and impose sentences;

2. The signing date of a new agreement that replaces the interest-free loan agreement is regarded as the termination date, but it is still essentially an extension of the power-for-money transaction. Continued;

3. Using the date when the briber is subject to detention measures as the termination date, the amount of bribery can be calculated during the review and prosecution stage, and accurate sentencing recommendations can be made, which meets the needs of judicial trials.

3. Collection of evidence for handling interest-free loan cases

The key to the conviction of such cases is to build a complete evidence system for power-money transactions.

(1) Build the evidence base that interest-free loans have property benefits.

As for the briber, the use of other funds during the interest-free loan period should be investigated to confirm whether it itself has to bear the specific capital usage costs , or to confirm the interest loss it will suffer after providing the interest-free loan.

As for the bribe recipient, evidence collection work should focus on whether he subjectively knew that the interest-free loan had property value, and objectively whether he had made any external loans.

(2) Obtain relevant documentary evidence for calculating the amount of bribery in accordance with the law. The investigators can send letters to several commercial banks to assist in calculating interest, and they will issue corresponding interest calculation sheets to ultimately accurately determine the amount of bribery in this case.

(3) Particular attention should be paid to and analyzed the details of indirect evidence, such as the identities, occupations, and personal contacts of both parties, effectively ruling out other possibilities , indirectly proving that public power is the main reason why the briber can "borrow" the briber's large sum of money for a long time without interest.

[Basic facts of the case]
(1) Crime of Accepting Bribery

1. During his tenure at the China Securities Regulatory Commission and Orient Securities Co., Ltd., the defendant Xiao Shiqing provided help to Zhuzhou Qianjin Pharmaceutical Co., Ltd. and Hunan Jiuzhitang Co., Ltd., which are controlled by Yongjin Group.

In 2006, out of gratitude, Wei, the actual controller of Yongjin Group, wanted Xiao Shiqing to take advantage of his position as a member of the M&A and Reorganization Review Committee of Listed Companies of the China Securities Regulatory Commission to help Guojin Securities Co., Ltd. , a company controlled by Yongjin Group, go public through a backdoor listing of Chengdu Construction Co., Ltd., and provided Xiao Shiqing with 135,000 Ruixing Property Trust financial products issued by Yunnan International Trust and Investment Co., Ltd., which he controlled.

After Xiao Shiqing accepted the principal of 150,000 yuan transferred by Wei and Tuo Lei, he handed the corresponding funds to Zhao, a shareholder of Yunnan Trust, and signed a fund entrustment agreement in the name of Liu, the nanny of Xiao Shiqing's family, and Zhao's wife Tan held 135,000 financial products on his behalf.

After the financial product expired in February 2008, Zhao transferred the principal and income of RMB 6,157,797.96 of the financial product to the account of Xiao Shiqing's wife Zhou Zhengqing in March 2008 through Tan's bank account.

2. From 2006 to 2007, China Galaxy Securities Co., Ltd. served as the sponsor and lead underwriter for the additional shares of Yicheng Group Co., Ltd. . In November 2007, it raised nearly 1.2 billion yuan for the company. In order to thank the defendant Xiao Shiqing for his support, Zhou Moumou, the director of Yicheng Company, proposed to sell a commercial house at a low price.

On August 20, 2008, Xiao Shiqing and his wife Zhou Zhengqing signed a house purchase contract in the names of Zhou Zhengqing and their son Xiao to purchase a set of commercial housing 8018 in Building 7, Haiyuan, Huafu Community, Wancheng, Beijing, developed by Yicheng Company. The contract price was 7.15843 million yuan. According to the appraisal by the Price Certification Center of the National Development and Reform Commission, the market price at the time of purchase should be 16.2643 million yuan.

In 2004, while the defendant Xiao Shiqing was serving as deputy director of the Listed Company Supervision Department of the China Securities Regulatory Commission, he learned that Sinopec planned to conduct a pilot integration of its listed subsidiaries and explore an overall listing.

In 2006, Xiao Shiqing took advantage of China Galaxy Securities 's opportunity to serve as a financial advisor to a listed company affiliated with Sinopec and obtained information that Sinopec was about to launch the second batch of share reform and restructuring work for its listed companies.

In September 2006, Shen, a former staff member of the China Securities Regulatory Commission, asked Xiao Shiqing to inquire about the accuracy of the information that Everbright Securities Co., Ltd. planned to borrow the shell listing of , Beijing Chemical No. 2 Co., Ltd. , a listed company under Sinopec.

After Xiao Shiqing learned from Everbright Securities Financial Director Hu Mou somewhere that Everbright Securities was negotiating with Sinopec on backdoor matters, from September 21 to 30, he instructed his sisters Xiao Moumou and Zou Moumou to use multiple accounts they controlled to purchase 4306002 shares of Beijing Chemical Er stock. The transaction cost was 35290545.12 yuan.

Sinopec later reached an agreement with Guoyuan Securities Co., Ltd. on the reorganization of the shell, and Beijing Sinopec changed its name to Guoyuan Securities .

After Guoyuan Securities resumed trading in in October 2007, Xiao Shiqing instructed Zou to sell the Guoyuan Securities stocks in the stock account of Liu, the nanny of Xiao Shiqing's family, whom he controlled.

In March 2009, Xiao Shiqing instructed his sister Xiao Moumou and others to liquidate all the Guoyuan Securities stocks they controlled. After forensic accounting appraisal, a total profit of RMB 103,901,338.92 was obtained.

The Zhengzhou Intermediate People's Court issued the (2011) Zheng Xing Yi Chu Zi No. 14 Criminal Judgment on March 25, 2011, finding the defendant Xiao Shiqing guilty of bribery and sentenced to death with a two-year suspended execution, deprivation of political rights for life, and confiscation of all personal property; guilty of insider trading, sentenced to eight years in prison and fined 150 million yuan. It was decided to execute the death penalty with a two-year reprieve, deprive him of his political rights for life, and confiscate all his personal property.

After the first instance verdict was pronounced, Xiao Shiqing appealed.On April 25, 2011, the Henan Provincial Higher People's Court made the (2011) Yufa Xing Er Zhong Zi No. 45 Criminal Ruling on April 25, 2011, rejecting the appeal, upholding the original judgment, and approved the first-instance sentence of defendant Xiao Shiqing to death for the crime of bribery and insider trading, with a two-year suspended execution, deprivation of political rights for life, and a criminal sentence of confiscation of all personal property.

The effective judgment of the court held that:

In summary, the defendant Xiao Shiqing, as a state employee, took advantage of his position to seek benefits for the trustee, entrusting the trustee with financial management, purchasing a house from the trustee at a low price, etc. The act of accepting bribes totaling RMB 15,463,667.96 constitutes the crime of bribery, and the circumstances are particularly serious; the defendant Xiao Shiqing used illegally obtained inside information to engage in stock trading activities, and illegally profited RMB 103,901,338.92, which constitutes the crime of insider trading, and the circumstances are particularly serious. According to the law, he should be punished for several crimes and punished.

Therefore, the first and second instance courts made the above rulings in accordance with the law.