Regulatory Probe "Double Whammy"! Guizhou Bailing's Controlling Shareholder Faces Insider Trading Investigation

Deep News12-05

Guizhou Bailing Group Pharmaceutical Co., Ltd. (002424), known as the "first Miao medicine stock," faces renewed turbulence as its chairman and controlling shareholder Jiang Wei becomes the subject of a China Securities Regulatory Commission (CSRC) investigation for alleged insider trading. This marks the second regulatory probe targeting Jiang and his company within a year.

1. Controlling Shareholder Under Insider Trading Scrutiny On December 3, Guizhou Bailing disclosed that Jiang Wei is under CSRC investigation for suspected insider trading, information disclosure violations, and illegal restricted stock transfers. Despite these challenges, the company maintains its leading position in the Miao medicine sector.

Jiang later issued an open letter via the company's official WeChat account, pledging full cooperation with regulators while urging employees to remain focused on operations. However, the letter couldn't offset market concerns - shares opened 5% lower following the announcement. Legal experts note that as the investigation currently targets only Jiang personally, shareholder claims appear limited.

2. Pending Regulatory Outcomes This isn't Jiang's first regulatory encounter. In December 2023, Guizhou securities regulators issued corrective orders and warning letters regarding accounting irregularities. The company has faced annual inquiry letters for ten consecutive years (2014-2024) concerning abnormal financial indicators including receivables, inventory, and sales expenses.

A major regulatory decision on August 2, 2024, identified multiple financial violations: - Improper sales expense period recognition violating accounting standards - Material internal control deficiencies These issues led to years of inaccurate financial disclosures, highlighting persistent governance weaknesses.

3. Investor Compensation Considerations Shanghai Huzi Law Firm's securities specialist Liu Peng outlines two potential claim windows for affected investors: (1) Purchased before November 8, 2024 and held/sold after November 9 with losses (2) Purchased between January 31 - April 29, 2024 and held/sold after April 30 (this claim window has already secured favorable court rulings)

While the company maintains the investigation doesn't impact operations, repeated regulatory issues continue damaging corporate credibility.

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