SEC Charges Future FinTech CEO Shanchun Huang With Fraud and Disclosure Failures

SEC Charges Future FinTech CEO Shanchun Huang With Fraud and Disclosure Failures

The U.S. Securities and Exchange Commission (SEC) has charged Shanchun Huang, the CEO of Future FinTech Group Inc., with manipulative trading and failure to disclose beneficial ownership of the company's stock. The charges relate to Huang's actions in 2020, when he allegedly engaged in deceptive trading practices using an offshore account shortly before assuming the role of Future FinTech's CEO.

According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Huang's involvement in manipulative trading began in late 2019 or early 2020. During this period, Future FinTech faced the risk of being delisted from NASDAQ due to its stock price falling below the minimum bid requirement of $1.00 per share. Huang purportedly used an account in Hong Kong to execute trades in Future FinTech stock, acquiring over 530,000 shares over a two-month period.

The SEC alleges that Huang's trading practices were designed to artificially inflate the stock price. Huang reportedly engaged in large-volume trades, accounting for a high percentage of the daily volume of Future FinTech stock transactions. Unusual trading patterns included multiple buy orders within short timeframes, escalating limit buy orders, and economically irrational trades. On February 6, 2020, Huang's trading constituted 60 percent of the daily trading volume, leading to a rapid increase in Future FinTech's stock price from $0.89 to $1.05 within nine minutes.

Crucially, the SEC accuses Huang of failing to disclose his beneficial ownership of Future FinTech stock and related transactions. Despite being required to file initial, annual, and change of ownership forms upon assuming the CEO role in March 2020, Huang allegedly neglected these obligations. It is further alleged that in March 2021, after divesting himself of all Future FinTech stock, Huang filed a misleading initial form claiming he owned no Future FinTech stock.

Sheldon L. Pollock, Associate Regional Director of the SEC's New York Regional Office, emphasized the importance of timely disclosure of insider stock transactions as a fundamental component of federal securities laws. He stated, "CEOs should assume that the use of an offshore account will not prevent the staff of the SEC from identifying manipulative trading."

The SEC's complaint charges Huang with violations of the antifraud and beneficial ownership disclosure provisions of the Securities Exchange Act of 1934. The regulatory body seeks permanent injunctive relief, a civil penalty, and an officer-and-director bar against Huang. The legal proceedings will unfold in the U.S. District Court for the Southern District of New York. The case underscores the SEC's commitment to enforcing transparency and fairness in the securities markets, particularly among top executives responsible for maintaining the integrity of their companies.

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