Quick Take: Shanghai Bourse Penalizes Speedy Share Sellers

The Shanghai Stock Exchange has handed down its first penalty for violating rules that limit share disposals by major shareholders of listed companies.

Four major shareholders of beverage maker V V Group have been hit with six-month trading restrictions as a penalty, the bourse said. The case was also reported to the China Securities Regulatory Commission (CSRC), it added.

Since May, shareholders who own at least 5% of a company, as well as company directors and senior managers, are subjected to new limits on share sales through block trades and private placements — popular ways to sell shares in bulk. This expanded a rule that has been effective since January 2016, which prohibits these shareholders from selling more than 1% of the company’s total shares within a three-month period.

The bourse said that three of the four major shareholders of V V Group sold their entire stakes one week after acquiring the shares in mid-October, and the fourth shareholder sold 96% of shares acquired also one week earlier.

Legal yet unchecked dumping of shares in bulk was seen amplifying market volatility and causing panic during the stock-market rout in the summer of 2015 at the expense of small and retail shareholders, the CSRC has said.

Contact reporter Aries Poon (ariespoon@caixin.com)