(Bloomberg) — Chinese regulators are investigating how the chairman's wife secretly traded 150 million yuan ($21 million) in company stock during a year of mass gatherings. The focus is on one of the country's most prominent AI and computing companies after an investigation revealed that .
Most Read Articles on Bloomberg
Xiaoning Information Industry, one of many Chinese technology leaders on the U.S. blacklist, was arrested by Zhang Dihua in 232 transactions between March 3, 2023 and March 14, 2024. He explained how he obtained 590,000 yuan. The company's stock price soared more than 50% during this period.
That's when investors flocked to companies expected to ride the wave of AI development across the country, which is embroiled in a technology race with the United States. Dawning, who went public with her affair following an investigation by her stock exchange, apologized for the incident, but she stressed that Zhang had kept her husband, Li Guojie, in the dark.
On Friday, the company's shares rose as much as 4.1%. Chinese regulators have vowed to crack down on insider trading and other market irregularities that persist at the relatively young stock exchange in a business environment where connections often matter.
Still, the rare public admission threatens to hurt one of the country's most influential tech figures. Backed by China's elite scientific research institutions, Dawning is one of the few domestic companies developing high-performance chips and servers for state-backed projects. In 2019, the U.S. government sanctioned the company for its role in developing supercomputers, effectively cutting it off from American software and components.
Mr. Li, 80, who has served as Dawning's chairman for the past 10 years, is a renowned academic and a member of the Chinese Academy of Engineering since 1995. The Purdue University-trained computer scientist guided Dawning through a computing boom spurred by the Chinese government's computer replacement efforts. American technology.
Read more: China fund beats 98% of peers to block AI trading at risk
Just recently, investors recognized Dawning as one of the potential winners in the AI ​​space.
Mr. Zhang's trading began about two weeks before the stock started rising, and the stock peaked around June of that year. Since then, excitement about machine-generated content has reignited, and the stock has risen another 83% from its February 2024 low to March 11.
Her actions were seen as a short-term deal by the executive's spouse. Mr. Dorning said Mr. Zhang submitted all profits in accordance with securities laws. However, she stressed that the transaction did not amount to insider trading based on personal information because the company did not consult the chairman, according to her filing. Dorning will provide relevant training for executives and Lee and his wife will comply with the law, she said.
–With assistance from Mengchen Lu.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP