Regulatory Authorities Crack Down Hard on Market Manipulation Penalties and Confiscations Exceed 1.1 Billion Yuan This Year

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Reporter Cheng Dan, Securities Times

Since the beginning of this year, the securities regulatory system has issued fines for multiple market manipulation cases, with total penalties exceeding 1.1 billion yuan. Heavy penalties have become the norm, signaling a clear message of zero tolerance and strict regulation.

Tian Lihui, Professor of Finance at Nankai University, stated that the significant increase in the number and severity of market manipulation fines results from strengthened regulatory efforts, improved regulatory technology,完善法律法规, and enhanced investor protection awareness. The application of advanced technological means has increased regulators’ ability to combat market manipulation. Continuous revision and improvement of relevant laws and regulations, along with harsher penalties for illegal activities, help raise the cost of violations and create effective deterrence.

Multiple fines issued in quick succession

Recently, the China Securities Regulatory Commission (CSRC) announced two administrative penalty decisions related to market manipulation violations, both involving “one fine plus double penalties,” with amounts of 37.62 million yuan and 38.63 million yuan respectively.

The subjects involved in these cases are natural persons. According to the CSRC investigation, from June 27 to November 30, 2022, Peng Shaodong controlled nine securities accounts, influencing stock prices through lifting, false declarations, and sealing limit-ups, earning approximately 12.54 million yuan illegally; from August 17 to November 4, 2022, Wang Zheng controlled seven securities accounts, using similar methods, with illegal gains totaling about 12.88 million yuan.

In response to regulatory penalties, Peng Shaodong and Wang Zheng presented three common defenses: first, they did not control the relevant accounts, so the illegal gains should be deducted; second, their trading activities were normal investment transactions without subjective intent to manipulate; third, the penalties were excessive. They requested reductions or exemption from penalties.

The CSRC, after review, believed that the individuals created a false impression of market activity by lifting stock prices, attracting other investors to trade, and then profiting from reverse transactions, demonstrating intent to manipulate. Considering the facts, nature, circumstances, and market harm, the CSRC confiscated Peng Shaodong’s illegal gains of about 12.54 million yuan and imposed a fine of approximately 25.08 million yuan, totaling about 37.62 million yuan; confiscated Wang Zheng’s illegal gains of about 12.88 million yuan and fined approximately 25.75 million yuan, totaling about 38.63 million yuan.

Prior to the Peng Shaodong and Wang Zheng cases, the CSRC issued its first fine in 2026 in January, also related to stock price manipulation. According to investigations, over more than five years, individual Yu Han used concentrated funds and shareholding advantages to buy and sell continuously, controlling 67 accounts to manipulate the stock price of Dr. Peng Glasses, illegally profiting about 510 million yuan. The CSRC ultimately imposed a “no one fine, one penalty” approach, with total penalties of about 1.02 billion yuan. Additionally, Yu Han was banned from securities markets for three years and prohibited from trading for three years, implementing a dual ban on identity and trading.

Besides CSRC penalties, local securities regulatory bureaus also punish manipulation cases. For example, Jin Yongrong, a prominent influencer on Snowball, manipulated the market through “hats” trading. Zhejiang Securities Regulatory Bureau fined and confiscated about 83.25 million yuan and imposed a three-year market ban. The exchanges focus on abnormal trading monitoring, key stock surveillance, and tip reporting, quickly addressing signs of manipulation such as lifting, suppressing, false declarations, and other behaviors. Over the past week alone, they took regulatory measures against more than 200 abnormal trading cases involving price manipulation, false declarations, etc., mainly targeting ST, *ST, and stocks with abnormal volatility.

Constant innovation in manipulation techniques

From the cases investigated, market manipulation methods are continuously evolving, characterized by multi-account operations, long-term control, covert tactics, and information coordination, coexisting with traditional short-term manipulation, including rapid intra-day lifts and drops, false declarations, order cancellations, and sealing limits.

For example, the “Jin Yongrong” case shows a new trend toward “information coordination.” Compared to traditional “hats” manipulation, the dissemination channels are more diverse. Influencers leverage multiple social media platforms to expand influence, attract attention through real trading competitions, live stock-picking logic sharing, and other methods, increasing credibility and audience engagement. These illegal behaviors are more covert and complex, increasing regulatory difficulty. Similarly, the “Yu Han” case involved controlling multiple accounts to coordinate trading of Dr. Peng Glasses, spanning multiple years and market cycles, with a manipulation period of up to five years, evading detection.

Market manipulation patterns are constantly being renewed, and regulatory technology is also upgrading. To address covert illegal activities, regulators employ comprehensive monitoring, big data analysis, multi-channel information collection, and intelligent analysis to build a “penetrating” clue screening system, enabling precise identification and strict crackdown on market manipulation.

“Market manipulation through artificial control distorts stock prices, causing sharp rises and falls, misleading investors’ trading decisions, and leading to heavy losses for investors after profits are taken,” industry insiders said. In terms of identification and enforcement, regulators have shifted from monitoring individual stocks to cross-stock and cross-market coordinated surveillance, effectively countering multi-stock manipulation. High-frequency trading monitoring systems also enable real-time detection of false declarations and other manipulative behaviors.

Increased enforcement力度

Market expectations are that regulators will continue to focus on “cracking down on big, bad, and key” cases, targeting issues most concerning to investors and deep reforms in the capital market, continuously strengthening the crackdown on illegal activities including market manipulation, which investors find most intolerable.

Recently, the CSRC announced its 2026 reform plan, emphasizing strengthening regulatory enforcement, cracking down on financial fraud, market manipulation, insider trading, false statements, and other violations, continuously improving investor protection systems, and enhancing the effectiveness and deterrence of regulation.

“Tian Lihui” stated that it is necessary to further improve enforcement effectiveness and reinforce a “zero tolerance” stance. First, legal support should be accelerated by issuing judicial interpretations on civil compensation for market manipulation and insider trading to increase penalties; second, technological empowerment should be deepened through AI-based penetrating supervision to improve detection and response speed; third, coordinated efforts should be strengthened by linking administrative, civil, and criminal accountability, and enhancing law enforcement cooperation.

Tian Lihui also advised investors to be cautious of stocks with long-term significant deviations from the market, fluctuating volumes, and lacking fundamental support. Investors should abandon speculative mindsets of chasing gains and selling on dips, focusing instead on a company’s core competitiveness and long-term value to avoid becoming a “bagholder” in market manipulation.