Changan Auto: 5 Employees Fined $23.8M for Insider Trading

On November 26, 2023, Chongqing Changan Automobile Co., Ltd. announced that it had signed an Investment Memorandum with a well-known technology company to pursue strategic cooperation in the field of intelligent vehicles. Prior to the official announcement, related information had already circulated online, raising suspicions of premature leakage of inside information. Regulatory authorities found that certain linked securities accounts had made unusually large purchases of Changan Automobile shares shortly before the announcement and immediately launched an investigation. The investigation revealed that, prior to the public disclosure of this material event, five employees—Han, Peng, Jie, Wei, and Wang—from both Changan Automobile and its partner company used insider information they possessed to collectively purchase Changan Automobile shares worth RMB 61 million, generating illicit profits totaling over RMB 4 million. The China Securities Regulatory Commission (CSRC) determined their actions constituted insider trading, ordered the confiscation of all illegal gains, imposed fines totaling RMB 16.69 million, and referred criminal leads to public security authorities. Among them, Han and Wei have already paid their penalties and forfeitures in full. The case exposed significant deficiencies in the companies’ management of insider information and inadequate confidentiality measures, which led to the premature leak of sensitive data and disrupted market order. All individuals involved were internal employees, highlighting weaknesses in compliance training and insider trading prevention at the relevant organizations. Some individuals demonstrated poor legal awareness, with one instance even involving a married couple jointly engaging in illegal conduct.