Deep Analysis of Ganfeng Lithium's Insider Trading Case: Exploration of Corporate Governance Improvement Paths

Ganfeng Lithium (SZ:002460)’s suspected insider trading case reached a major turning point on December 29, 2025. The company received a transfer prosecution notice from the Yichun Municipal Public Security Bureau on the same day; due to suspected unit crime of insider trading, the relevant case has been officially transferred to the procuratorate for review and prosecution [1][2]. This marks the official transition of the case from the administrative penalty stage to the criminal judicial process.

The case originated between June and August 2020, when Ganfeng Lithium illegally bought and sold Jiangte Motor’s (former *ST Jiangte, SZ:002176) stocks using the company’s securities account during the insider information sensitive period while negotiating strategic cooperation with Jiangte Motor. Specific transaction records show: On June 22, 2020, Ganfeng Lithium transferred 30 million yuan to the securities account; between June 23 and July 2, it purchased a total of 15.6777 million shares of *ST Jiangte, with a purchase amount of approximately 26.4838 million yuan; it sold all shares between July 8 and 9, with a sales amount of approximately 27.6329 million yuan, resulting in a final profit of 1.1053 million yuan [1].

According to the facts found by the Jiangxi Securities Regulatory Bureau, on April 29, 2020, Jiangte Motor was placed under “delisting risk warning” by the Shenzhen Stock Exchange due to consecutive two years of negative net profits. To resolve the delisting risk, Jiangte Motor submitted a report on relevant measures to the Yuanzhou District Government of Yichun City on June 8, mentioning the introduction of strategic investors and other contents. No later than June 9, 2020, relevant executives of Jiangte Motor began to promote the introduction of strategic investors; this matter may lead to changes in the company’s controlling shareholder and actual controller, which is statutory insider information, and the insider information sensitive period was from June 9, 2020 to August 13, 2020 [1][3].

Promoted by the Yuanzhou District Government, Ganfeng Lithium began to contact Jiangte Motor in June 2020, and on June 18, then Chairman Li Liangbin, then Board Secretary Ouyang Ming, and others visited Jiangte Motor for inspection and communication. As insiders of the insider information, after learning the insider information, Li Liangbin and Ouyang Ming, under Li Liangbin’s decision and arrangement, with Ouyang Ming in charge and securities department employees operating, Ganfeng Lithium’s securities account conducted transactions of *ST Jiangte stocks during the sensitive period [2].

It is worth noting that according to the “Provisions on Standards for Filing Criminal Cases for Prosecution under the Jurisdiction of Public Security Organs (II)” by the Supreme People’s Procuratorate and the Ministry of Public Security, the standards for filing criminal cases for insider trading crimes are: the amount of profit or loss avoidance is more than 500,000 yuan, or the securities transaction turnover is more than 2 million yuan. In this case, Ganfeng Lithium’s profit of 1.1053 million yuan and turnover of 26.4838 million yuan both far exceed the criminal filing threshold [3].

Previously, the Jiangxi Securities Regulatory Bureau had issued the “Administrative Penalty Decision” on July 5, 2024, determining that Ganfeng Lithium’s above-mentioned actions violated relevant provisions of the Securities Law of the People’s Republic of China and constituted insider trading. The penalty decision was: confiscate Ganfeng Lithium’s illegal gains of 1.1053 million yuan and impose a fine of 3.3159 million yuan; give a warning to Li Liangbin and impose a fine of 600,000 yuan; give a warning to Ouyang Ming and impose a fine of 200,000 yuan, with a total of more than 4 million yuan in confiscations and fines [1][2].

From a legal perspective, this case presents a typical path from administrative violation to criminal offense. According to Article 180 of the Criminal Law, insiders of securities or futures trading insider information or persons who illegally obtain securities or futures trading insider information, before the information related to securities issuance, securities or futures trading, or other information that has a significant impact on the price of securities or futures trading is made public, buy or sell the securities, or engage in futures trading related to the insider information, or disclose the information, or explicitly or implicitly instruct others to engage in the above-mentioned trading activities, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also or only be fined not less than one time but not more than five times the illegal gains; if the circumstances are especially serious, shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years, and shall also be fined not less than one time but not more than five times the illegal gains.

The insider information involved in this case has statutory characteristics. According to Article 52 of the Securities Law, insider information refers to unpublished information related to the issuer’s operation, finance, or that has a significant impact on the market price of the issuer’s securities in securities trading activities. Specifically, it includes: major investment behaviors of the company; the company’s purchase or sale of major assets exceeding 30% of the company’s total assets within one year, or the mortgage, pledge, sale, or scrapping of the company’s main operating assets exceeding 30% of such assets at one time; the company’s conclusion of important contracts that may have an important impact on the company’s assets, liabilities, equity, and operating results; the company’s occurrence of major debts and defaults on major到期 debts; the company’s occurrence of major losses or major damages, etc. [4].

The identification of the insider information sensitive period also has clear legal basis. According to the “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Specific Application of Law in the Handling of Criminal Cases of Insider Trading and Disclosure of Insider Information”, the formation time of insider information is the occurrence or formation time of the involved “major event”, “plan”, “scheme”, “policy”, or “decision”. The initial time of the proposal, planning, decision-making, or implementation by the personnel who affect the formation of insider information is also presumed to be the formation time of insider information [4].

In this case, Ganfeng Lithium was investigated for criminal liability as a legal entity, constituting a unit crime. According to Paragraph 3 of Article 180 of the Criminal Law, if a unit commits the crime mentioned in the preceding paragraph, the unit shall be fined, and the directly responsible persons in charge and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention. This means that directly responsible persons such as Li Liangbin and Ouyang Ming will face criminal prosecution and may bear criminal liability of fixed-term imprisonment of not more than five years or criminal detention [1][2].

As the world’s largest producer of metallic lithium and China’s largest supplier of lithium compounds, in 2021, Chairman Li Liangbin topped the list of Jiangxi’s richest people with a net worth of 54.5 billion yuan, known as the “World Lithium King” [3]. However, this global lithium giant is deeply involved in the insider trading scandal, exposing multiple systematic defects in the company’s governance.

According to public information, although Ganfeng Lithium has governance documents such as the “Insider Information and Insider Registration Management System”, it failed to effectively implement them in practice. The scope of insiders of insider information is not clearly defined, the implementation of confidentiality responsibilities is not in place, and the information barrier system failed to play its due role, leading to the rapid transformation of insider information into trading behavior after being known [1].

In this case, the insider trading behavior was decided and arranged by Chairman Li Liangbin, specifically responsible by Board Secretary Ouyang Ming, and executed by securities department employees, forming a complete illegal decision-making chain. This reflects that the company’s internal control has serious defects at the decision-making level, lacks an independent supervision mechanism for executive decisions, and the supervision functions of independent directors and the board of supervisors failed to play an effective role [1][2].

During the critical sensitive period of major project negotiations, the company not only failed to impose trading restrictions on insiders of insider information but also organized relevant personnel to conduct on-site inspections and participate in subsequent negotiations throughout the process, directly leading to the expansion of the scope of people who know the insider information. More seriously, the company’s securities account conducted large-scale stock transactions during the sensitive period, fully indicating that the sensitive period management mechanism is a mere formality [3].

From the details of the case, the company’s executives have insufficient understanding of the legal consequences of insider trading and have obvious luck psychology. According to the Securities Law, insider trading constitutes an offense regardless of whether it makes a profit; if the circumstances are serious, it will also constitute a criminal offense. After learning the insider information, the company’s executives not only did not take the initiative to avoid relevant transactions but also actively planned and executed them, exposing a serious lack of compliance awareness [4].

In response to the governance issues exposed by Ganfeng Lithium and similar enterprises, combined with regulatory requirements and best practices, it is recommended to systematically promote governance improvement from the following dimensions:

Listed companies should establish a dynamic management mechanism for the insider information insider registration system, regularly update the list of insiders of insider information, including not only directors, supervisors, and executives but also grass-roots employees and external intermediary personnel who may come into contact with insider information due to work relations. Relevant internal systems should be systematic, including the “Information Barrier Management System”, “Insider Information and Insider Registration System”, “Employee Securities Trading Code of Conduct”, etc., clearly defining the scope, transmission process, and confidentiality responsibilities of insider information, and effectively implementing them [4].

In the process of major decision-making, the scope of insiders of insider information should be strictly controlled, confidentiality commitments should be signed, negotiation processes should be recorded, supervision of insiders should be strengthened during the information sensitive period, and trading restrictions on relevant securities should be imposed if necessary. After the insider information is made public in accordance with the law, it should be promptly released through legal channels to ensure that investors obtain information fairly. At the same time, an emergency response mechanism for information leakage should be established to promptly respond once suspicious situations are found [4].

At the board level, the supervisory and checks-and-balances role of independent directors should be further played. Independent directors should express independent opinions in major decision-making, make independent judgments on matters that may involve insider information, and effectively supervise executive decisions. At the same time, the operation mechanism of various special committees of the board of directors should be improved, especially the audit committee should conduct substantive review of financial information and information disclosure of major matters [5].

The board of supervisors should effectively perform its supervision duties and supervise the legality and compliance of the performance of duties by the company’s directors and senior managers. It is recommended to establish a system for supervisors to attend major meetings, a major matter reporting system, and an independent investigation mechanism for supervisors on executive behaviors to enhance the initiative and effectiveness of supervision [5].

The management should strengthen compliance awareness and establish a compliance culture from top to bottom. The company should set up a special compliance department, equip it with professional compliance personnel, conduct compliance reviews on the decision-making process of major matters, and ensure that all business activities comply with laws and regulations.

Listed companies should establish an information barrier system to achieve information isolation between different business departments, preventing the improper flow of unpublished information between different business links. For major matters such as mergers and acquisitions and strategic cooperation, a “firewall” mechanism should be established, and personnel participating in negotiations and investment transaction personnel should be physically and personnel isolated [4].

In the process of planning major matters, project-based management should be implemented, the scope of information knowledge should be controlled, confidentiality agreements should be signed, and key time nodes should be recorded. During the information sensitive period, transaction monitoring should be implemented for insiders of insider information, and trading restriction measures should be taken if necessary. At the same time, employee securities trading behavior management should be strengthened, and a declaration and monitoring mechanism for employees and their associated accounts should be established [4].

Listed companies should strengthen compliance training for insiders, inform employees of the legal responsibilities of insider trading (including civil liability, administrative liability, and criminal liability), explain typical cases, and clarify the company’s internal compliance processes and reporting mechanisms, so that relevant personnel can clearly understand their legal obligations and violation consequences. The training content should cover the identification of insider information, the code of conduct for compliant trading, information confidentiality requirements, etc. [4].

More importantly, the company should cultivate a corporate culture centered on integrity and compliance. Senior managers should set an example, take the lead in complying with laws, regulations, and company systems, and form a value orientation of compliance first within the company. The construction of corporate culture is a long-term process that needs to be promoted collaboratively from multiple dimensions such as system construction, behavior norms, and performance appraisal.

Listed companies should formulate the “Information Disclosure Affairs Management System”, improve the management model of information disclosure responsible persons, and standardize the daily management of information disclosure. For the disclosure of major matters, the completeness, accuracy, and timeliness of the disclosed content should be ensured, and selective disclosure or delayed disclosure should be avoided [5].

In the process of planning major matters, the information disclosure rules should be strictly followed, and announcements that may lead to stock price fluctuations should not be issued without sufficient basis. For cases where the planning of major matters is terminated, a more detailed explanation should be provided, including the main considerations for the termination decision and key differences during the negotiation process (to the extent that it does not involve commercial secrets), so that investors can understand the company’s decision-making logic [5].

From the short-term impact perspective, this case is not expected to have a substantial impact on Ganfeng Lithium’s normal production and operation. The company has completed the relevant rectification of the insider trading matter in response to the administrative penalty, not only fulfilled the information disclosure obligation in a timely manner in accordance with regulations but also paid the relevant confiscations and fines in full. The company emphasized in the announcement that as of now, all production and operation activities of the company remain normal and orderly [1][2].

However, from the perspective of long-term development, the potential impact of the insider trading case on the company cannot be ignored. On the one hand, the criminal prosecution process may lead to the company and relevant responsible persons facing criminal liability, which will have a continuous impact on the company’s reputation; on the other hand, as a global lithium giant, Ganfeng Lithium’s governance shortcomings have attracted high attention from regulators and the market, and compliance governance capabilities have become an important weight restricting its transformation success or failure [3].

It is worth noting that Ganfeng Lithium is at a critical node of transformation. The company is promoting the spin-off and listing of its subsidiary Ganfeng Lithium Battery; its core advantages are still prominent: global top-tier lithium resource layout forms a stable supply guarantee, lithium resource self-sufficiency rate exceeding 50% builds a cost moat, and vertical integration of the industrial chain layout enhances risk resistance capabilities. But whether it can make up for the governance shortcomings directly determines whether this enterprise can truly achieve high-quality development and transform into an energy technology enterprise with global competitiveness [3].

The evolution process of Ganfeng Lithium’s insider trading case from administrative penalty to judicial prosecution fully reflects the firm attitude of “zero tolerance” in China’s capital market supervision. This case is not only a legal accountability for a listed company but also a warning to all market participants: insider trading is a major threat to the healthy development of the capital market, and any behavior that touches the regulatory red line will be severely punished.

For listed companies, establishing and improving the corporate governance system, perfecting the internal control mechanism, and strengthening compliance awareness are the only way to prevent legal risks and achieve sustainable development. An effective compliance system should cover the entire process of corporate governance, from pre-prevention, in-process monitoring to post-response, forming a complete risk control closed loop. Enterprises should combine their own situation and the latest regulatory requirements, continuously improve the internal control mechanism, and effectively prevent the risk of insider information leakage through various measures such as system construction, training and education, and technical means [4].

Only by internalizing compliance awareness into corporate culture and implementing system construction into daily management can we truly build a system defense line to prevent insider trading and promote the high-quality development of the capital market.

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[1] National Business Daily. Ganfeng Lithium Receives Transfer Prosecution Notice for Suspected Unit Crime of Insider Trading. https://www.nbd.com.cn/articles/2025-12-30/4202304.html

[2] Eastmoney. From Administrative Penalty to Judicial Accountability! Ganfeng Lithium Suspected of Unit Crime of Insider Trading is Prosecuted. https://wap.eastmoney.com/a/202512303604796360.html

[3] OFweek. “Lithium King” Involved in Crime! Insider Trading Case Upgraded, Will the 21 Billion Valuation Subsidiary IPO Hang in the Balance? https://mp.ofweek.com/libattery/a056714209597

[4] Lexology. Talking about Securities Trading Compliance from the Perspective of Criminal Defense of Insider Trading Crimes. https://www.lexology.com/library/detail.aspx?g=10f3b9c5-0961-4d64-b19a-f1761840d782

[5] Securities Times. Information Disclosure of Major Matters Should Ensure Seriousness and Prudence. https://www.stcn.com/article/detail/3552464.html