Recently, the news of a former sponsor representative of a leading securities firm in China sentenced to 10 years in prison for making a profit of 2 million yuan through stock market manipulation has sparked strong attention in the capital market. At the same time, the identification of the sponsor as a “state functionary” has raised doubts.
According to a report by the “Daily Economic News” on Tuesday, the Executive General Manager of the Investment Banking Business Management Committee and the sponsor representative of a major securities firm, Du Pengfei, was prosecuted for “bribery” for allegedly engaging in stock market manipulation in the Zhonghua New Materials IPO project. Despite the total amount involved being 4.1 million yuan, with Du Pengfei personally receiving about 2 million yuan, the prosecution has recommended a sentence of 10 to 11 years.
A sponsor representative (referred to as “sponsor”) in the Chinese securities market is a person appointed by a qualified securities company to be responsible for the stock issuance and listing sponsorship work and to bear corresponding responsibilities. They act as a link between the company planning to go public and the China Securities Regulatory Commission, signing on critical documents.
It has been reported that an informed source confirmed the accuracy of this information. Recently, “Caixin” also reported on this issue.
According to the prospectus for the initial public offering and listing on the Science and Technology Innovation Board of Guizhou Zhenghua New Materials Co., Ltd., the sponsor (lead underwriter) was China CITIC Securities Co., Ltd., and the sponsor representatives were Du Pengfei and Li Bo, with the signing date being September 8, 2021.
The case was heard in the Longsha District Court in Qiqihar at the end of October 2025. The trial is ongoing, and no verdict has been announced yet.
Public information shows that China CITIC Securities is a state-owned securities firm, with major shareholders including Beijing Financial Holding Group Co., Ltd., Central Huijin Investment Ltd., and China CITIC Group Co., Ltd.
According to an article on “Caixin,” the sponsor representative of a securities firm would manipulate stock prices by engaging in stock market manipulation during the process of sponsoring companies for listing. Such violations are not uncommon in the A-share market. However, sponsors usually face administrative penalties such as confiscation of illegal gains, fines, and ban from the securities market. It is rare for them to be criminally prosecuted.
It was common for cases of sponsors engaging in low-priced stock market manipulation to be sentenced for suspected non-state functionary bribery (referred to as “non-public bribery”). However, recently, sponsors have been accused of bribery, and their status corresponds to “state functionaries” in the Criminal Law, resulting in doubled sentencing, which is very unusual.
However, netizens generally do not agree with the identification of the sponsor as a “state functionary.”
“CJCX” commented, “Regarding the welfare treatment, they are not considered state functionaries.”
“Lion in Calmness” said, “Expanding the scope of identification and generalizing the understanding of state functionaries to include ordinary employees of state-controlled enterprises as engaging in public duties will likely backfire on the attraction and cultivation of talents in state-owned financial institutions and enterprises, which is somewhat frightening!”
“Yun Rui” said, “Many big corrupt officials who embezzled billions and caused much greater loss to state-owned assets and public interests often receive sentences of just over ten years. But this ordinary employee making a profit of 2 million, following the legally assessed evaluation procedures and causing almost no actual losses or harm, only receiving a ten-year sentence for an issue with the stock purchase status – is this really ‘equality under the law’?”
According to the report in the “Daily Economic News,” to disguise the actions, Du Pengfei did not personally invest but instead contacted a familiar employee of a listed company named Liu Fei. Liu Fei subsequently invested 1.5 million yuan, transferred the funds to a designated holding account, and registered the shares under the name of an existing shareholder of Zhenghua New Materials. Notably, the two did not sign any written agreements during the process, only verbally agreeing to split any future profits equally.
In September 2021, Zhenghua New Materials listed on the Science and Technology Innovation Board at a price of 11.75 yuan per share. When the first batch of restricted shares was lifted in September 2022, the stock price was around 50 yuan. The holding account began gradually selling off shares, eventually realizing a total profit of approximately 4.1 million yuan. Of this, Liu Fei transferred around 2 million yuan to Du Pengfei through the holding company.
Prior to the incident, Du Pengfei had overseen or participated in several significant capital operations, including the IPO projects of Zhenghua New Materials, Threelink Control, and Daisenlin, as well as the rights offering and bond issuance of Xiangxue Pharmaceutical, the convertible bonds of Huafeng Stock, and the non-public refinancing project of Leke Defense.
It was not an isolated case where a securities sponsor representative like Du Pengfei profited from “stock market manipulation.” A criminal ruling revealed by the Shanghai Second Intermediate People’s Court on May 28, 2019, showed that in 2009, Niu Huaming, then the General Manager of the Investment Banking Department of GF Securities, and two others engaged in low-priced stock market manipulation before the listing of Dongfang Guoxin, making a profit of over 40 million yuan after the shares were unlocked. Niu Huaming and the other two were found guilty of non-state functionary bribery and were sentenced to 30 months to a suspended sentence of 21 months.