Yes. Manipulating China’s stock or futures market is a crime under Article 182 of the Criminal Law: up to five years in prison for serious cases, up to ten years for especially serious ones, plus a fine and confiscation of illegal gains.

What counts as manipulation in China?

Article 182 was rewritten by Amendment XI to the Criminal Law (passed on 26 December 2020, in force since 1 March 2021). It now lists seven types of conduct: trading jointly or in concert to influence price or volume; pre-arranged or mutually agreed trades; trading between accounts you actually control; frequent or large orders placed and then cancelled without intent to trade; using false or uncertain material information to induce investors; publicly rating or recommending a security while trading the other way; and any other method of manipulating the market.

When does trading become a crime?

The Supreme People’s Court and Supreme People’s Procuratorate interpretation (Fa Shi [2019] No. 9, in force on 1 July 2019) supplies the numbers. “Serious circumstances” — the five-year tier — can be met where the value of securities traded reaches RMB 10 million, or illegal gains reach RMB 1 million. “Especially serious circumstances” — five to ten years — generally means RMB 50 million in trading value or RMB 10 million in gains; RMB 5 million in gains is enough where aggravating factors such as continuing after being placed under investigation, a previous criminal record for the same conduct, or a prior administrative penalty within two years are present.

Who is prosecuted: the trader or the company?

Both. Article 182 applies to units as well as individuals: where a company commits the offence, the company is fined and its directly responsible managers and other directly responsible personnel are convicted personally. That is where executives, controlling shareholders and even compliance staff carry real exposure. Trading on the National Equities Exchange and Quotations (NEEQ) market is handled under the same interpretation.

A publicly reported case

On 23 January 2017 the Qingdao Intermediate People’s Court sentenced investor Xu Xiang for stock market manipulation: five years and six months in prison, a fine of RMB 11 billion, and confiscation of illegal gains of about RMB 933.7 million, with two co-defendants convicted alongside him. It is still the clearest warning that this offence is punished on both the prison side and the asset side.

The bottom line: in China your order flow, your public statements and your profits are all evidence — the numbers, more than your intent, decide whether the outcome is a fine or a prison term.

FAQ

Q: Is manipulating China’s stock market a crime?

A: Yes. Manipulating China’s stock or futures market is a crime under Article 182 of the Criminal Law: up to five years in prison for serious cases, up to ten years for especially serious ones, plus a fine and confiscation of illegal gains.

Q: What types of conduct count as market manipulation?

A: Article 182 lists seven types: trading jointly or in concert to influence price or volume; pre-arranged or mutually agreed trades; trading between accounts you actually control; frequent or large orders placed and then cancelled without intent to trade; using false or uncertain material information to induce investors; publicly rating or recommending a security while trading the other way; and any other method of manipulating the market.

Q: What are the criminal thresholds?

A: Under the 2019 interpretation, serious circumstances can be met where the value of securities traded reaches RMB 10 million, or illegal gains reach RMB 1 million. Especially serious circumstances generally means RMB 50 million in trading value or RMB 10 million in gains.

Q: Can a company be prosecuted as well as the trader?

A: Yes, both. Article 182 applies to units as well as individuals: where a company commits the offence, the company is fined and its directly responsible managers and other directly responsible personnel are convicted personally.

Q: Is trading on the NEEQ market treated differently?

A: No. Trading on the National Equities Exchange and Quotations (NEEQ) market is handled under the same interpretation.

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Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512