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Interface News reporter | Feng Saiqi
On May 14, the Shanghai Financial Court disclosed that the verdict on a securities firm's representative's plan to sue a listed company, requiring it to bear the tort liability for securities misrepresentation, has come into effect. The court rejected all the claims of the brokerage.
Interface news learned that the brokerage involved in the case is Guojin Securities, and the listed company involved in the case is ST Zhongan (600654).Seagamesinsingapore.sh).
It is reported that the case is the country's first case of securities misrepresentation liability dispute involving an employee stock ownership plan nested in the asset management plan.
In April 2015, ST Zhongan established an employee stock ownership plan, which raised a maximum of 50 million yuan, and entrusted CICC Securities to set up a collective plan to manage it. The main scope of investment is to buy and hold shares in ST Zhongan. The employee stock ownership plan has a total of 15 people, all of whom are senior executives or key leaders of ST Zhongan subsidiary company and its affiliated companies.
It is reported that the collection plan consists of priority A share, intermediate B share and inferior C share. A share is subscribed by Pudong Development Bank, with a total subscription capital of 225 million yuan, while B share is purchased by Guojin Securities, with a total subscription capital of 25 million yuan. Share An and share B enjoy fixed income, and share C is the employee stock ownership plan. C share and the actual controller of ST shall be responsible for compensating the fixed income of A share and B share.
The situation below the early warning line or stop line occurred many times after the establishment of the collective plan, and the actual controller of ST covered the position to the collective plan five times between April 2016 and May 2017.
In May 2017, because the pooling plan was once again below the stop-loss line and the position was not fully covered, the representative of CICC Securities issued a breach of contract notice to the employee stock ownership plan and the actual controller of ST, informing them of the specific disposal measures such as the compulsory closing operation, and then sold all the ST Zhongan shares held.
Because its subsidiary Zhonganxiao Technology did not provide true and accurate profit forecasts, seriously inflated the asset valuation of major restructuring, and inflated operating income in 2013, resulting in misleading statements and false records in the major asset restructuring documents publicly disclosed by ST Zhongan. In 2019, ST Zhong an was administratively punished by the CSRC.
Guojin Securities sued that its collective plan to buy shares in the secondary market after the date of implementation of the false statement and sell after the date of disclosure should be presumed to have a causal relationship between the investment decision and the misstatement. Zhong'an in ST shall bear the liability for compensation.
After hearing the case, the Shanghai Financial Court concluded that the establishment of the pooling plan and the trading of the stocks of listed companies were in order to fulfill the agreement of the employee stock ownership plan, and the employee shareholding plan should know about the misrepresentation of securities. The investment decisions of the holders of shares An and B in the pooling plan are mainly based on the trust in differential compensation, not on the trust in the information disclosure of listed companies.
After comprehensive consideration, the court held that the transaction causality between the collective plan investment decision managed by Guojin Securities and the misrepresentation was not established, so it made a judgment of first instance and rejected all the litigation claims of Guojin Securities.
After the judgment of the first instance, Guojin Securities filed an appeal to the Shanghai High Court, and the second instance rejected the appeal and upheld the original verdict.
Yang Lichuan, Senior Judge of the case filing Division of the Shanghai Financial Court, held that in the securities misrepresentation case, there is a causal relationship between the trading behavior of the plaintiff's investors and the defendant's securities misrepresentation, which is an important part of judging whether the plaintiff can obtain compensation. The goal of holding shares in Guojin Securities is to obtain fixed income, and it has not taken substantial stop-loss measures because of false statements. However, it is only when Ann fails to fulfill its position replenishment obligations in full as agreed in ST that it promptly issues a notice of breach of contract and an announcement of expiration of the collective plan.
