During his meteoric rise in Chinese finance, Xu Xiang earned a few nicknames. For his vigorous assertions of shareholder rights, he’s been called “China’s Carl Icahn.” For his breathtaking returns, he earned the nom de guerre “hedge fund brother No. 1.” It may seem strange to link a (former) billionaire with Pol Pot, the Cambodian dictator whose genocidal regime abolished money along with about a quarter of the country’s population. But as of earlier today, he and the original Brother No. 1 do have something in common: a criminal conviction. With Icahn? Not so much.
Former hedge fund manager Xu Xiang pleaded guilty to charges of market manipulation in one of the most high-profile cases to follow last year’s stock market collapse in China….
Two other defendants -- fund manager Wang Wei and Zhu Yong -- also pleaded guilty, the statement said. The court will announce sentences at a later date.
Xu made his avoiding losses during last year’s crash, which is to say that his Zexi Investment Management’s hedge funds averaged a 249% return last year before he was arrested on a bridge in November. Now, we have a pretty good idea how it managed.
The court’s statement said that it had heard evidence that Mr. Xu had helped set up and secretly control about 100 securities accounts. They were mostly registered in the names of friends, employees and relatives, and Mr. Xu received a portion of the profit from the coordinated trading of the accounts, the court said.
Mr. Xu also profited from conspiring with top executives at 13 companies to control the timing and content of favorable corporate announcements, the court said. Two co-defendants with Mr. Xu also pleaded guilty.