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Shanghai police swoop on talk show group, arresting eight, including three Taiwanese, for sharing stock tips ahead of new bourse

Daniel Ren ren.wei@scmp.com

Shanghai police have detained Liao Yingqiang, a well-known TV host, along with seven employees of his company including three employees who are Taiwanese for providing stock tips to small investors ahead of the trading debut of the city's new technology innovation board Star Market.

The police said in a statement on Monday evening that Liao and others, including his elderly brother, offered advisory services to investors through seminars without obtaining proper licences from authorities.

The police did not reveal the full names of those arrested, but identified Liao as the owner of Thousand Billion Education and Aicaopan (Shanghai) Network Information.

"Their behaviours have caused disorder on the securities and futures markets and seriously infringed upon the interest of investors," the police statement said.

Shanghai police said three of the seven employees detained were Taiwan residents, without revealing their full names.

Another four analysts employed by Liao's companies were detained, but they were later released on bail, the statement said.

Taiwan has asked China to provide the latest information on the detained analysts under a cross-Taiwan Strait crime-fighting and judicial mutual assistance agreement, according to English-language new service Focus Taiwan.

Chinese talk show host fined US$12.5 million for misleading small equity investors

Liao, 49, was fined last year 86.2 million yuan (US$12.5 million) by the China Securities Regulatory Commission (CSRC) for unduly influencing the share prices of 39 listed companies.

The company advised investors to buy stocks in organised seminars as well as the online platform iguxuan.com, a website linked to Thousand Billion Education.

Liao's illicit gain of 43.1 million yuan from 13 affiliated accounts between March and November 2015 was confiscated by the CSRC.

The regulator set the fine at double his ill-gotten profits.

At that time, the CSRC did not say whether the case would be transferred to law-enforcement authorities for further investigation.

Last year, Liao Yingqiang was fined last year 86.2 million yuan (US$12.5 million) for unduly influencing the share prices of 39 listed companies.. Photo: Handout alt=Last year, Liao Yingqiang was fined last year 86.2 million yuan (US$12.5 million) for unduly influencing the share prices of 39 listed companies.. Photo: Handout

Shanghai police said Liao and his employees were being investigated for illegal activities beginning in April 2016.

In China, it is illegal to provide investment advice relating to equities and futures without obtaining the proper licensing requirements set by the CSRC.

China officially launches technology innovation board, with trading expected to begin within two months

"Thousands of mainland retail investors are still inexperienced and believe those well-known commentators in making their investment decisions," said Ivan Li, an asset manager with hedge fund Loyal Wealth Management. "It is important to punish those unscrupulous commentators before the official inauguration of the Star Market."

Trading of an initial batch of 25 companies on the Star Market is set to debut on July 22. The new board, touted as a groundbreaking move to reform China's capital markets, is a pet project of President Xi Jinping. In November, Xi announced that he wanted a new tech board at the Shanghai Stock Exchange to support the country's technological innovations.

Star Market is a new technology innovation board, which is being dubbed China's Nasdaq-style market. Photo: Xinhua alt=Star Market is a new technology innovation board, which is being dubbed China's Nasdaq-style market. Photo: Xinhua

Individuals with investment capital of less than 500,000 yuan will be barred from trading on the innovation board.

Liao, a Tianjin native, became famous as the host of the Shanghai-based China Business News TV channel between 2012 and 2016, which he left to set up his own stock market consultancy.

The CSRC has adopted a harsh stance on market irregularities to help protect small investors over the past decade.

Regulators concede that it has been an uphill battle to educate investors on best practices when investing in equities.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.