PVTIME – On October 26, Jiangsu Nanjing Intermediate People’s Court (hereinafter referred to as Nanjing Intermediate People’s Court) issued a “Case Closing Notice” to Yang Huaijin, the former Chairman of Hareon Solar Technology Co., Ltd. (SH 600401, hereinafter referred to as Hareon Solar). The notice stated that since Yang Huaijin’s family has paid the fine of 400,000 yuan to the court on his behave, plus the 600,000 yuan penalty previously imposed on him by the China Securities Regulatory Commission (CSRC), the execution of his property penalty has been completed and the case was closed.
Yang Huaijin, the “Godfather of Chinese PV”, was sentenced to 2 years and 10 months in prison in the first instance by Nanjing Intermediate People’s Court back in July and fined 1 million yuan, he did not appeal.
Publicly available information shows that Yang Huaijin was born in Yangzhong, Zhenjiang, Jiangsu Province in September of 1963. He studied at the Shanghai University of Finance of Economics and received his bachelor’s degree in economics in 1985. In 1994, Yang obtained a master’s degree in economics from Macquarie University in Australia, where he would later become a citizen.
Around 2000, Yang returned to China to help finance the establishment of Suntech Power Holdings Co., Ltd.; in 2004, he raised funds to establish Chinasunergy (Nanjing) Co., Ltd.; In 2005, he participated in the establishment of JA Solar Holdings Co., Ltd.
At the end of 2009, Yang Huaijin participated in his “fourth venture”: the restructuring of Hareon Solar, and successfully served as CEO, President, Director, and Chairman of the company. In 2011, Hareon Solar’s backdoor listing was “conditionally approved” by the China Securities Regulatory Commission.
Due to his successes in the operation and listing of four photovoltaic companies, Yang Huaijin was dubbed by the media as the “Godfather of Chinese PV.”
After the backdoor A-shares listing, Hareon Solar’s performance was always poor. A subsequent investigation by the China Securities Regulatory Commission found that in order to avoid the implementation of the delisting risk warning (ST) for two consecutive years of losses, Hareon Solar set a profitable business goal in early 2014. However, the introduction of the relevant policies by the National Energy Administration in the second half of 2014 where the revenue recognition policy of photovoltaic power plants was adjusted, had a great impact on the company’s profit model.
In late November and early December of 2014, Yang Huaijin discussed and communicated with Vice President and CMO, Zhou Yike; Director and Executive Vice President, Zhang Yongxin; and other senior executives and financial personnel of Hareon Solar on the company’s performance in 2014, and reached a consensus: if the company was unable to achieve profitability in 2014, more losses should be recognized within the financial allowable range, and be placed as much loss as possible in the current year to lay a solid foundation for the company’s future development.
On January 22, 2015, Hareon Solar issued the “Announcement on Pre-Disclosure of Profit Distribution Plan for 2014”, stating that it will “transfer 20 shares for every 10 shares to all shareholders from the capital public reserve”. This led to a two-week explosive growth of its stock as high as 40%.
Then, on the evening of January 30, 2015, Hareon Solar released an earnings guidance announcement stating that “it is estimated that the net profit attributable to shareholders of listed companies will be around negative RMB 800 million for 2014.”
Prior to this announcement, Yang Huaijin and others shareholders participated in the large scale dumping of personal shares.
According to the CSRC, the above-mentioned acts of Yang Huaijin, Zhou Yike and Zhang Yongxin violate the provisions of paragraph 1 of Article 76 of the Securities Law (that is, ” the insiders of securities trading and persons who illegally obtained insider information shall not buy or sell the securities of the company, or disclose such information, or suggest others to buy or sell the securities before the insider information is disclosed”). The circumstances are serious and constitute an illegal act of insider trading as described in Article 202 of the Securities Law.
On January 20, 2017, the China Securities Regulatory Commission (CSRC) made a punishment decision, imposing an administrative penalty of 600,000 yuan on Yang Huaijin and gave him five-year market ban. During the prohibition period, Yang Huaijin is not allowed to engage in securities business or serve as a director, supervisor or senior manager of a listed company. Zhou Yike and Zhang Yongxin were also banned from entering the market for three years and fined 600,000 yuan respectively.
Jiurun Management Co., Ltd., the second largest shareholder of Hareon Solar, and its chairman, Ren Xiangdong, also significantly reduced their holdings of Hareon’s shares after obtaining insider information.
The CSRC issued the following punishment to Jiurun Management: confiscation of 61.9407 million yuan of illegal income obtained through insider trading and a penalty of 61.9407 million yuan. Ren Xiangdong, the person in charge of Jiurun Management at the time, received a 10-year market ban and was fined 900,000 yuan.
Following the monetary punishments came criminal penalties for the parties involved.
In July 2020, the first instance of Nanjing Intermediate Court sentenced Yang Huaijin to two years and 10 months’ imprisonment and gave him a 1 million yuan fine. Yang did not appeal.
Zhou Yike and Chen Hao were also punished in the same case with him. Zhou Yike was sentenced to 2 years and 8 months in prison, with a probation of 3 years, and a fine of 1 million yuan; Chen Hao was sentenced to 2 years and 8 months, with a probation of 3 years, and a fine of 5 million yuan.
It is worth noting that Chen Hao, who once served as Vice President and Secretary of the Board of Directors of Hareon Solar, did not appear in the punishment documents of the CSRC. However, Zhang Yongxin and Ren Xiangdong, who were given administrative punishment decisions by the CSRC, were not prosecuted by the Nanjin