Impact Analysis of Ganfeng Lithium Being Transferred for Prosecution Over Alleged Insider Trading

On the evening of December 29, 2025, Ganfeng Lithium (002460.SZ), a leading enterprise in the lithium industry, issued a major announcement stating that the company had received the 《Notice of Transfer for Prosecution》 from the Yichun Municipal Public Security Bureau on the same day. Due to the suspected unit crime of insider trading, the relevant case has been officially transferred to the procuratorate for review and prosecution [1][3]. This marks the official escalation of this insider trading case, which has lasted for more than five years, from the administrative punishment stage to the criminal judicial process.

The root cause of the case can be traced back to June-July 2020. At that time, Ganfeng Lithium and Jiangte Motor (now “ST Jiangte”), which was facing delisting risks, were in contact regarding merger and acquisition matters. This unpublicized major event constituted inside information according to law, with the sensitive period being from June 9 to August 13, 2020. Promoted by the local government, Li Liangbin, Chairman of Ganfeng Lithium, and Ouyang Ming, then Secretary of the Board, conducted an on-site inspection of Jiangte Motor on June 18 and participated in subsequent negotiations throughout, thus becoming insiders of inside information according to law [2].

However, during the sensitive period of inside information, under the decision and arrangement of Li Liangbin, with Ouyang Ming in charge and securities department employees operating specifically, Ganfeng Lithium transferred 30 million yuan to the company’s securities account on June 22, bought a total of 15.6777 million shares of Jiangte Motor from June 23 to July 2, with a purchase amount of approximately 26.48 million yuan, and then sold all of them from July 8 to 9, making a profit of 1.105 million yuan [1][2]. This trading behavior crossed the red line of securities supervision.

The accountability for this case has gone through a complete escalation process from administrative punishment to criminal justice:

The Jiangxi Securities Regulatory Bureau issued the 《Administrative Penalty Decision》, confirming that Ganfeng Lithium’s above-mentioned behavior constituted insider trading. The company was ordered to confiscate the illegal gains of 1.105 million yuan and fined 3.315 million yuan; Li Liangbin, the directly responsible person in charge, was given a warning and fined 600,000 yuan; Ouyang Ming, another directly responsible person, was given a warning and fined 200,000 yuan [1][3]. The company has paid the fines and confiscations as required and completed relevant rectifications.

The case was transferred to the procuratorate for review and prosecution. According to the 《Provisions on the Standards for Filing Cases for Prosecution of Criminal Cases Under the Jurisdiction of Public Security Organs (II)》 issued by the Supreme People’s Procuratorate and the Ministry of Public Security in 2022, the filing standards for insider trading crimes are: profit or loss avoidance amount of more than 500,000 yuan, or securities trading turnover of more than 2 million yuan. In this case, Ganfeng Lithium made a profit of 1.1053 million yuan and had a turnover of 26.4838 million yuan, far exceeding the criminal filing threshold [2].

According to the 《Judicial Interpretation on Insider Trading》, Ganfeng Lithium’s behavior has constituted “serious circumstances” (securities trading turnover of more than 500,000 yuan), but has not yet reached the standard of “especially serious circumstances” (securities trading turnover of more than 2.5 million yuan). For unit crimes, the statutory penalty range for directly responsible persons is fixed-term imprisonment of not more than five years or criminal detention [2].

The escalation of the insider trading case to the criminal prosecution level has had a significant negative impact on Ganfeng Lithium’s secondary market stock price. According to real-time trading data, the company’s stock price fell明显 after the announcement was released [0]:

Indicator	Value
Current Stock Price	62.89 yuan
Daily Change	-1.96%
Trading Volume	51.53 million shares (above average)
52-Week High	76.19 yuan
52-Week Low	28.00 yuan

The market’s reaction to this negative news was direct, and the stock price drop reflected investors’ concerns about the company’s governance risks and subsequent legal uncertainties. Notably, the stock price fell more significantly on the next day after the announcement (December 30), reaching 4.74% [3], indicating that the market was still digesting this major negative information.

From a more macro perspective, Ganfeng Lithium’s market value has retracted significantly from its historical peak. The insider trading case is only one of the factors affecting the company’s valuation; the downward industry cycle caused by剧烈 fluctuations in lithium prices has also had a profound impact:

• Historical Peak:
  In September 2021, Ganfeng Lithium’s market value once reached a peak of 322.6 billion yuan [2]
• Current Market Value:
  Approximately 131.9 billion yuan
• Market Value Evaporated:
  More than 190 billion yuan, a shrinkage rate of nearly 60%

This market value retraction reflects both the cyclical characteristics of the lithium ore resource industry and the market’s pricing of the company’s governance compliance risks. The initiation of criminal prosecution may further increase the company’s valuation pressure, especially against the background of declining risk appetite among institutional investors.

From a valuation perspective, Ganfeng Lithium currently faces multiple pressures:

1. Legal Risk Premium:
   Uncertainties brought by criminal prosecution may lead institutional investors to demand a higher risk premium
2. Increased Compliance Costs:
   More resources may need to be invested in compliance rectification and judicial response in the future
3. Tightened Financing Environment:
   Credit ratings and financing capabilities may be negatively affected
4. Damaged Customer Trust:
   As an upstream resource supplier, the company’s reputation damage may affect its cooperation with downstream battery and vehicle enterprises

The IPO path of Jiangxi Ganfeng Lithium Battery Technology Co., Ltd. (hereinafter referred to as “Ganfeng Lithium Battery”), a holding subsidiary of Ganfeng Lithium, faces substantial obstacles due to the parent company’s administrative punishment. According to relevant provisions of the 《Trial Rules for Spin-off Listing of Listed Companies》 issued by the CSRC, if a listed company or its controlling shareholder, actual controller has been subject to administrative punishment by the CSRC within the recent 36 months, it shall not spin off its subsidiary for listing [1][2].

Ganfeng Lithium received the Administrative Penalty Decision in July 2024, which means:

• Lock-Up Period Coverage:
  Ganfeng Lithium Battery cannot be listed through spin-off before July 2027
• 2025 Year-End Deadline Invalid:
  Ganfeng Lithium Battery’s original target of completing the IPO by December 31, 2025 has completely failed to materialize [2]

Ganfeng Lithium Battery completed three large-scale capital increases and share expansions from 2020 to 2022, introducing many well-known institutional investors including Xiaomi Changjiang Industry Fund and Advanced Manufacturing Industry Investment Fund Phase II. Each round of financing signed strict VAM clauses, stipulating that if Ganfeng Lithium Battery fails to achieve a qualified IPO by December 31, 2025, investors have the right to require the company’s actual controller to repurchase shares.

With the substantial collapse of the IPO target, the VAM clauses were triggered, leading to a collective exit of institutional investors:

Ganfeng Lithium Battery launched targeted capital reduction and repurchase, planning to repurchase no more than 499 million shares with no more than 1.6 billion yuan. This repurchase involved 28 shareholders, among which 23 will withdraw completely, including well-known investors such as Hubei Xiaomi Changjiang Fund, Advanced Manufacturing Industry Investment Fund, Hainan Jimu Venture Capital, Anker Innovations, GoodWe, Dongfeng Assets, Transsion Holdings, and Demao Capital [1][2].

This large-scale capital exit wave directly reflects institutional investors’ pessimistic expectations for the company’s IPO prospects and marks a major setback in Ganfeng Lithium Battery’s capital market operation.

Looking back at Ganfeng Lithium Battery’s financing history, its capitalization path evolution can be clearly seen:

Round	Time	Financing Amount	Valuation	Main Investors
First Round	November 2020	415 million yuan	-	Employee Stock Ownership Platform
Second Round	July-October 2021	3.04 billion yuan	5.34 billion yuan	Xiaomi Industrial Investment, Dongfeng Motor, Changan Automobile, etc.
Third Round	November 2022	2.693 billion yuan	9 billion yuan	Advanced Manufacturing Industry Investment Fund Phase II, etc.
C Round	December 2025	1 billion yuan	21 billion yuan	Led by Industrial Bank System

As of September 25, 2025, Ganfeng Lithium held approximately 81.65% of Ganfeng Lithium Battery’s shares, and the latter’s registered capital was approximately 2.509 billion yuan [1][2]. Notably, in September 2025, Ganfeng Lithium promoted a new round of capital increase for Ganfeng Lithium Battery, planning to introduce no more than 2.5 billion yuan, with an increase price of 3 yuan per 1 yuan of registered capital, showing that the company still tried to maintain the subsidiary’s operation through direct financing against the background of IPO obstruction.

Ganfeng Lithium Battery is still in a loss state and faces greater operating pressure:

• Full Year 2024:
  Revenue of 6.073 billion yuan, loss of 128 million yuan
• First Half of 2025:
  Revenue of 2.6 billion yuan, loss of 62.7176 million yuan
• Asset-Liability Ratio:
  68.02%

To cope with funding pressure, Ganfeng Lithium announced in April 2025 to provide financial assistance of no more than 700 million yuan to Ganfeng Lithium Battery. In addition, as of the latest announcement, Ganfeng Lithium’s financing guarantee amount for Ganfeng Lithium Battery exceeded 5.686 billion yuan, showing the parent company’s strong support for the subsidiary, but this also increased the financial burden of the listed company [2].

The stock price may continue to be under pressure, and attention needs to be paid to the degree of market sentiment release and the progress of judicial procedures. The increased trading volume indicates fierce long-short games, and investors need to be alert to volatility risks.

The criminal judicial process will continue to advance, and the final judgment result will have a far-reaching impact on the company. If relevant responsible persons are held criminally responsible, it may have an impact on the company’s governance structure and management stability.

This case may trigger stricter supervision by the regulatory authorities on insider trading behavior in the lithium resource industry, and other enterprises need to strengthen their compliance awareness.

This case may prompt regulatory authorities to pay more attention to the historical compliance records of the parent company and its controlling shareholders when reviewing spin-off listing applications.

Ganfeng Lithium is transforming from a traditional lithium ore resource company to a new energy technology enterprise, and Ganfeng Lithium Battery bears the company’s strategic mission of extending to the downstream. The obstruction of IPO not only means the blocking of the capitalization path, but also may affect the company’s layout rhythm in emerging fields such as solid-state batteries and energy storage [2].

At the same time, as a leading enterprise in the upstream of the lithium industry, Ganfeng Lithium has close cooperation with the international new energy vehicle industry chain. The exposure of the company’s compliance risks may have a negative impact on the trust of international customers, thereby affecting overseas business expansion.

1. Criminal Accountability Risk:
   If relevant responsible persons are sentenced to punishment, it may have a major adverse impact on the company’s governance
2. Civil Compensation Risk:
   Investors harmed by insider trading may file civil lawsuits for compensation
3. IPO Uncertainty Risk:
   Ganfeng Lithium Battery’s IPO window period is closed, and it is difficult to break through in the short term
4. Industry Cycle Risk:
   Lithium price fluctuations will still dominate the company’s performance
5. Liquidity Risk:
   If institutional investors continue to exit, it may affect the company’s financing capacity

Investors should closely follow the following matters:

• Further trial progress of the case by judicial organs
• Whether the company will face additional administrative penalties or regulatory measures
• The operating status and financing arrangements of Ganfeng Lithium Battery
• Changes in lithium resource industry policies and market supply and demand

The incident of Ganfeng Lithium being transferred for prosecution over alleged insider trading is a major negative milestone in the company’s development history. This incident not only led to the escalation of the company’s criminal liability, but also directly ended the original IPO plan of its subsidiary Ganfeng Lithium Battery, triggering a large-scale exit of institutional investors, and causing a significant impact on the company’s market value and financing capacity.

From the impact path, the insider trading case affects the company’s value through three main lines: direct legal liability and punishment, strategic adjustment caused by the obstruction of the subsidiary’s IPO, and valuation discount brought by the loss of market confidence. Under the dual pressure of the downward cycle of the lithium industry and compliance risks, Ganfeng Lithium is facing the most severe challenges in recent years.

For investors, they need to closely follow the progress of judicial procedures and changes in the company’s operating fundamentals, and carefully evaluate investment risks. In the current context of stricter regulatory environment, the compliance of company governance has become an important factor affecting the valuation of listed companies, and investors need to pay more attention when selecting stocks.

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[1] Yicai - “Unit Crime Involving Insider Trading! Ganfeng Lithium Transferred for Prosecution, Subsidiary’s Spin-off IPO Blocked” (https://www.yicai.com/news/102980353.html)

[2] OFweek - “‘Lithium King’ Involved in Crime! Insider Trading Case Escalated, 21 Billion Yuan Valuation Subsidiary’s IPO Hangs in the Balance?” (https://mp.ofweek.com/libattery/a056714209597)

[3] Securities Times Online - “Ganfeng Lithium Suspected of Insider Trading Transferred for Prosecution” (https://stcn.com/article/detail/3563184.html)

[4] NetEase Finance - “100-Billion ‘Lithium King’ Engages in Insider Trading, Ruins ‘Daughter Company’s’ IPO” (https://www.163.com/dy/article/KI2CN4870552LIRB.html)

[5] Huxiu - “100-Billion ‘Lithium King’ Engages in Insider Trading, Ruins ‘Daughter Company’s’ IPO” (https://www.huxiu.com/article/4822316.html)