Summary of Key Points
Public fund manager Zhang Kun took advantage of his position to manage nearly 9 billion yuan in funds and set up a “pocket book” (a secret trading account) using multiple accounts belonging to others, such as his spouse’s classmates and domestic workers. Over an eight-year period, he conducted transactions totaling 7.68 million yuan but only made a profit of 75,200 yuan. In the end, the authorities confiscated his illegal gains and imposed a fine of 410,000 yuan, effectively ending his career. This case not only exposes the absurdity of pocket book trading—where high investment leads to low returns—but also demonstrates the power of regulatory authorities’ thorough investigations and the need for improvements in industry compliance.
Detailed Analysis
1. Eight years of secret trading resulting in a mere 70,000 yuan profit? That’s a huge loss!
As a fund manager overseeing nearly 9 billion yuan, Zhang Kun’s official income would have been in the millions per year (the industry average). However, he risked losing his job by engaging in pocket book trading:
- Time-consuming effort: Over eight years (2015–2023), he used seven different accounts, constantly living in fear of being caught by regulators.
- Large transaction volume: The total amount traded was 7.68 million yuan, equivalent to several decades of an average person’s income.
- Meager returns: He made a mere 75,200 yuan, less than his monthly salary.
- Fatal consequences: His illegal gains were confiscated, and he was fined 340,000 yuan, for a total loss of over 300,000 yuan. He also lost nearly a decade of career opportunities—he could have become a fund manager managing billions of yuan.
This is like trying to pick up sesame seeds while dropping watermelons; he gave up a lucrative and legitimate income to engage in risky, illegal activities.
2. No matter how clever you are at avoiding regulation, “penetrating surveillance” will catch you
Zhang Kun used various tricks to evade detection:
- Dividing transactions into smaller parts: He rotated through multiple accounts (e.g., Gu Mouzhen, Zhao Mouhua), and even borrowed accounts from friends who didn’t trade stocks, thinking this would obscure his tracks.
- Long-term account rotation: The earliest account was used for over two years, and the latest one until 2023, in an attempt to sustain his illegal activities for a longer period.
However, regulators have advanced tools: through big data analysis, they could determine if the transactions on these accounts were consistent with those of the fund he managed. If the trading patterns matched, it revealed Zhang Kun as the actual controller. It’s like sending messages via someone else’s WeChat account, but your tone and habits still reveal you.
3. Are there loopholes in fund companies’ compliance measures? Hidden accounts escape detection?
Fund companies have rules requiring the registration of securities accounts held by employees and their relatives, and research analysts (like fund managers) are prohibited from directly or indirectly trading stocks. Zhang Kun exploited these loopholes:
- Using non-direct relatives’ accounts: He used accounts belonging to his spouse’s classmates or distant friends, which were not required to be registered.
- Concealing transactions: He never reported the accounts he controlled to the company, avoiding internal audits.
This shows that regulatory systems have gaps, especially regarding accounts held by non-direct relatives. However, with improved monitoring technologies, regulators can detect such violations regardless of registration status.
4. Pocket book trading no longer yields huge profits; it’s a losing venture
In the past, pocket book trading could be very profitable, but now regulations are stricter. Many cases result in significant losses and fines:
- Li Dan, former manager at China Life Security: Lost 33 million yuan on similar trades and was fined 600,000 yuan.
- Xu Wenfeng, former manager at Pingyin Ansheng: Lost 7 million yuan and was fined 1.53 million yuan plus a five-year market ban.
Regulators don’t care if you make a profit; any use of your position for illegal trading will result in punishment. This serves as a warning to all professionals: Don’t take chances; pocket book trading not only fails to generate profits but can also ruin your career.
5. Regulators cover the entire chain, with no hidden corners
Previously, it was thought that only fund managers would engage in such activities, but now regulators are investigating even back-office staff:
- An employee from a securities firm’s IT department was caught using his access to sensitive data to relay trading instructions to relatives (e.g., “2” meant sell). This shows that regulations extend to all who have access to confidential information. Financial institutions must be more stringent, monitoring both front-line analysts and back-office staff to ensure compliance.
In conclusion
Trying to engage in pocket book trading is like trying to steal a chicken only to end up losing all your grain. You won’t make any money and will risk losing your job and facing heavy fines. It’s better to focus on professional work and earn a legitimate income. Regulatory authorities are becoming more vigilant, and no one can hide their illegal activities for long.