The Wall Street Journal (WSJ) reported on the 5th (local time) that insiders of Chinese companies listed on the U.S. stock market avoided losses of more than 10 billion dollar by selling stocks in advance over the past few years.
According to a paper written by Robert Jackson, a former member of the Securities and Exchange Commission (SEC), insiders, including senior executives of Chinese companies listed on the U.S. stock market, avoided at least $10 billion in losses from 2016 to mid-year.
Investors keep an eye on their transactions, assuming that insiders have a lot of information, and since 2002 when the deadline for U.S. insiders’ disclosure of transactions was shortened from more than a month ago to two days, insiders’ earnings have declined, the survey showed.
Jackson, a former SEC member, will attend a Senate insider trading law hearing and urge foreign companies to apply the same insider trading reporting rules as U.S. companies.
Ahead of the Chinese authorities’ extensive regulations on technology companies last year, executives of Chinese technology companies, including Aichi, also avoided losses due to the “timed” stock sale.
Executives of Aichi, a video streaming platform called “China’s Netflix,” sold 125 million dollars worth of shares in just a few days in March last year. Since then, the stock price has halved in two months and fell to one-third in October of that year.
Around the same time, senior executives of e-commerce company Wayfinhui (Vipshop) sold more than $250 million of shares when the stock price was close to an all-time high. Shares of the company fell more than 70 percent over the next six months.
