Chinese AI tycoon’s wife admits to $28.6 million of secret trades
Chinese regulators have pledged to crack down on insider trading and other market irregularities that persist on relatively young bourses. PHOTO: REUTERS
UPDATED
APR 12, 2024, 04:00 PM
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BEIJING - Chinese regulators are zeroing in on one of the country’s most prominent artificial intelligence (AI) and computing companies, after a probe uncovered how the chairman’s wife secretly traded 150 million yuan (S$28.6 million) of company stock during a year-long mega rally.
Dawning Information Industry, one of a plethora of Chinese technology leaders blacklisted by the US, described how Ms Zhang Dihua pocketed 590,000 yuan from 232 trades between March 3, 2023, and March 14, 2024. The company’s shares surged more than 50 per cent during the period.
That was when investors poured into companies expected to ride a wave of AI development across a country locked in a tech race with the US. Dawning, which disclosed the affair after an inquiry from the stock exchange, apologised for the incident but stressed that Ms Zhang kept her husband, Mr Li Guojie, in the dark.
The company’s shares rose as much as 4.1 per cent on April 12. Chinese regulators have pledged to crack down on insider trading and other market irregularities that persist on relatively young bourses, in a business environment that often prizes connections.
Still, the rare public admission threatens to tar one of the country’s most influential tech industry figures. Backed by China’s elite science research institute, Dawning is one of a handful of domestic players developing high-performance chips and servers for state-sponsored projects.
Washington sanctioned the company in 2019 for its role in supercomputer development, effectively cutting it off from American software and components.
The 80-year-old Mr Li, who has been Dawning’s chairman over the past decade, is a renowned academician and member of the Chinese Academy of Engineering since 1995.
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The Purdue University-trained computer scientist led Dawning through a computing boom spurred by Beijing’s efforts to replace American technology. More recently, investors identified Dawning as one of the potential winners in AI.
Ms Zhang’s trading started two weeks before the shares embarked on their rally, which peaked around June 2023. The stock then gained another 83 per cent between a trough in February and March 11 of 2024, as excitement over machine-generated content rekindled.
Her actions were considered short-term trading by the spouse of an executive. Dawning said Ms Zhang has turned in all profits in compliance with securities law. But the company emphasised the transactions did not amount to insider trading based on private information, the filing said, since the chairman was not consulted.
Dawning said it will conduct related training for executives and that Mr Li and his wife will abide by laws and regulations. BLOOMBERG
