Various publicly listed companies in China disclosed circumstances of what they describe as accidental stock sales in the last few weeks. An example of this event is Shenzhen Changfang, a manufacturer of light-emitting diode (LED) products, mentioned in a filing that on Friday, shareholder Nie Xianghong sold 16,000 shares by keying in the wrong stock ticker. She was acting with Li Dichu, one of the company’s top investors who has a roughly 11% stake and wanted to cut his holdings by 3% of its shares, the filing mentioned.
Last Monday, in a publicly released response to the Shenzhen Stock Exchange’s letter, it replied that no market manipulation or insider trading occurred. The company said that Li and some significant investors can still complete their share reduction steps. The stock price has significantly increased from September 2 to 7, even disclosing sharp revenue losses from the coronavirus’s shock in Changfang’s export markets like India.
This issue and other “errors” of the trade by major shareholders came after stocks reported significant gains this 2020. The CSI 300 has increased by 12%, and the Shanghai composite heightened by 7% for 2020 so far. Some regulators also transitioned with efforts this 2020 by opening financial markets to foreign institutions and deleting some stock listings and trading restrictions.
Still, analysts said that stricter punishment for securities fraud is needed for China’s stock markets to reach maturity. The other filings this September presented that the accidental stock sales can occur at both smaller and well-known companies.
Sany Heavy Industry, a well-known manufacturer of construction machines, disclosed last Friday that because of the transaction’s “misoperation,” Mao Zhongwu sold 96,700 more shares than previously promised. Mao is among Sany’s biggest shareholders and will be charged 300,000 yuan ($43,852) for illegal sales, based on the company’s filings.
The supplier for LCD TV companies, Jiangsu Lettall Electronic, mentioned on September 3 that Zhang Defeng, past chairman of the company’s board of supervisors, sold 42,000 shares prior reaching the expiration six-month lockup period after the expiry of his term in the month of May. On September 1, TCL Technology mentioned in a filing that Li Dongsheng, another shareholder, also typed in the wrong ticker and accidentally sold five million shares.