In-depth Analysis of Ganfeng Lithium's Criminal Accountability for Insider Trading and the Five-Year Lookback Mechanism

According to public information, Ganfeng Lithium Group Co., Ltd. (stock code: 002460.SZ) is facing criminal accountability for suspected insider trading. The case has been officially transferred by the Economic Crime Investigation Department of Yichun Municipal Public Security Bureau to the procuratorate for review and prosecution [1]. This marks that one of China’s largest lithium compound producers is experiencing a major legal and governance crisis.

• June-July 2020
  : Ganfeng Lithium’s insider trading behavior involving Jiangxi Special Electric Motor stock occurred
• December 2022
  : Jiangxi Regulatory Bureau of China Securities Regulatory Commission discovered the relevant illegal acts and launched an investigation
• December 2024
  : The case officially entered the criminal judicial process, and the company received the prosecution notice from the procuratorate
• December 2025
  : The case continued to ferment, and the stock price fell by 5.8% at one point in the Hong Kong stock market [2][3]

According to the regulatory investigation, Ganfeng Lithium purchased a large number of Jiangxi Special Electric Motor stocks using insider information from late June to early July 2020. The specific transaction characteristics are as follows:

• Purchase Time
  : Late June to early July 2020
• Average Purchase Price
  : Approximately RMB 1.68 per share
• Sale Time
  : July 8-9, 2020
• Illegal Profits
  : Approximately RMB 1.1053 million

This trading pattern clearly constitutes a typical insider trading behavior, i.e., using undisclosed major information for stock trading and profiting.

The regulatory authorities have made a severe administrative penalty decision on the case:

The cumulative fine amount exceeds RMB 4.4 million, causing significant economic and reputational losses to the company and relevant responsible persons [4].

China’s securities regulatory system has strengthened the retrospective period for securities violations in recent years, forming the so-called “five-year lookback mechanism”. The legal basis of this mechanism mainly comes from the following aspects:

1. Relevant Provisions of the Securities Law
   : The statute of limitations for administrative penalties for insider trading and other illegal acts is five years
2. Policy Orientation of the New “Nine National Guidelines”
   : Strengthen the overall requirements of full-chain supervision and strict supervision
3. Upgrade of CSRC’s Inspection and Law Enforcement
   : Establish a regulatory system with “sharp teeth and thorns” and edges

The five-year lookback mechanism mainly focuses on the following illegal acts:

• Fraudulent Issuance
  : Conduct retrospective verification of historical IPO fraud acts
• Financial Fraud
  : Conduct lookback on financial statement fraud over the years
• Insider Trading
  : Hold accountable for transactions using undisclosed information
• Market Manipulation
  : Conduct long-term retrospective on market manipulation acts
• Illegal Share Reduction
  : Conduct penetrating supervision on illegal share reduction by major shareholders

Current regulatory law enforcement presents the following notable characteristics:

1. Double Penalty System
   : Punish both institutions and individuals
2. Qualification Penalty
   : Impose securities market entry bans on serious violators
3. Joint Law Enforcement
   : Establish collaboration mechanisms between the CSRC and public security, procuratorial departments
4. Precision Accountability
   : Increase punishment for “principal culprits” and “key minorities” [5]

The Ganfeng Lithium case highlights the core position of information disclosure in listed company governance. Regulatory authorities emphasize the regulatory concept centered on information disclosure. Any untimely or inaccurate disclosure of major matters may lead to serious legal consequences. Listed companies must establish a sound information management system to ensure timely, accurate and complete disclosure of major information.

• Establish an internal reporting and confidentiality system for major information
• Strengthen the awareness of information disclosure responsibilities among directors, supervisors and senior managers
• Conduct regular information disclosure compliance training

This case exposes obvious loopholes in insider information management of some listed companies. As a listed company, Ganfeng Lithium’s management should have strictly complied with various regulations on insider information management, but insider trading still occurred, indicating that the company’s internal control system has defects.

• Establish a registration system for insiders of insider information
• Implement sensitive period trading restrictions
• Strengthen insider information confidentiality measures
• Establish an information firewall system

In this case, both Chairman Li Liangbin and former Secretary to the Board Ouyang Ming were punished individually, reflecting the regulatory authorities’ attitude of precise accountability for the “key minority”. This means that the compliance responsibilities of listed company executives are more clear, and no one can shirk individual responsibilities on the grounds of “company behavior”.

• Strengthen awareness of individual legal responsibilities
• Establish and improve a personal conflict of interest declaration mechanism
• Strictly implement the share lock-up and pre-disclosure system for share reduction

The implementation of the five-year lookback mechanism makes historical illegal acts no longer have a “safe period”. Ganfeng Lithium’s illegal acts in 2020 were still held accountable after more than four years, fully demonstrating the regulatory authorities’ ability and determination to trace back for a long time. Listed companies cannot have a fluke mentality; any illegal act may be traced back one day in the future.

• Conduct regular self-inspection of historical transactions
• Proactively disclose and rectify historical issues
• Establish a compliance file management system

After the occurrence of this case, Ganfeng Lithium’s stock price fell by 5.8% at one point in the Hong Kong stock market, with a decline of more than 46% during the year. This indicates that major legal risks have a huge negative impact on the company’s market value. When conducting market value management, listed companies must take compliance operation as the bottom line. Any market value maintenance behavior at the cost of violations will not be worth the loss.

As a leading enterprise in the lithium industry chain, Ganfeng Lithium’s internal control defects and illegal acts have important warning significance for the entire industry. In recent years, the new energy vehicle industry chain has developed rapidly, and relevant enterprises are facing greater challenges in market value management and compliance construction.

• Increase investors’ attention to the internal control level of lithium enterprises
• Prompt peer enterprises to strengthen compliance self-inspection
• May trigger regulatory authorities’ key attention to industrial chain enterprises

This case also provides important enlightenment for the institutional construction of capital markets:

1. Information Disclosure Supervision Under the Registration System
   : In the context of the full implementation of the stock issuance registration system, the quality of information disclosure becomes the core of supervision
2. Responsibilities of Intermediaries
   : The case reflects that intermediaries need to play a greater role in continuous supervision
3. Investor Protection
   : Insider trading seriously damages market fairness, and a more perfect investor compensation mechanism needs to be established

Facing the pressure of criminal accountability, Ganfeng Lithium needs to take the following response strategies:

1. Actively Cooperate with Judicial Procedures
   : Proactively cooperate with investigations and provide necessary evidence materials
2. Strengthen Communication with Regulators
   : Maintain good communication with regulatory authorities and strive for lenient treatment
3. Stabilize Operational Fundamentals
   : Ensure that the company’s main business is not significantly affected
4. Strengthen Investor Relations Management
   : Disclose relevant information to investors in a timely and accurate manner

In the long run, Ganfeng Lithium needs to improve corporate governance from the following aspects:

1. Reshape Internal Control System
   : Comprehensively sort out and improve internal control systems
2. Strengthen Compliance Culture Construction
   : Integrate compliance awareness into all aspects of corporate culture
3. Optimize Board Structure
   : Enhance the independence and professionalism of the board of directors
4. Establish Compliance Assessment Mechanism
   : Incorporate compliance performance into the assessment system of management

The criminal accountability case of Ganfeng Lithium’s insider trading is a landmark case since the implementation of the five-year lookback mechanism, which has a far-reaching impact on listed company governance. This case shows that China’s securities supervision is changing from “loose and soft” to “strict and hard”, the cost of violation has increased significantly, and compliance operation has become an inevitable requirement for the development of listed companies.

For all listed companies, this case provides the following core enlightenment:

• Compliance is the Bottom Line
  : Any short-term interests at the expense of compliance are unsustainable
• Responsibilities Need to Be Shared
  : All parties including companies, directors, supervisors, senior managers and intermediaries need to bear corresponding responsibilities
• No Time Limit for Retrospection
  : Historical illegal acts cannot be “whitewashed” by the passage of time
• Governance Needs to Be Upgraded
  : The level of corporate governance needs to match the stage of enterprise development

Against the background of the full implementation of the registration system and increasingly strict supervision, only by internalizing compliance operation into the core gene of enterprise development can listed companies achieve long-term healthy development in the capital market and realize the unity of enterprise value and social value.

[1] Longbridge - “Ganfeng Lithium Faces Prosecution Over Suspected Insider Trading” (https://longbridge.com/en/news/271009758)

[2] Bloomberg - “Ganfeng Lithium Says It May Face Insider-Trading Charges” (https://www.bloomberg.com/news/articles/2025-12-30/ganfeng-lithium-says-it-faces-possible-insider-trading-charges)

[3] Nasdaq - “Hong Kong Stocks: Ganfeng Lithium Faces Setback with Insider Trading Fines” (https://www.nasdaq.com/articles/hong-kong-stocks-ganfeng-lithium-faces-setback-insider-trading-fines)

[4] Ganfeng Lithium Announcement and Administrative Penalty Decision of Jiangxi Regulatory Bureau of China Securities Regulatory Commission

[5] China Securities Regulatory Commission Official Website - “Sharp Teeth and Thorns” “Strict Supervision and Management” Continuously Increase Efforts to Crack Down on Securities and Futures Violations (http://www.csrc.gov.cn/csrc/c100200/c7481207/content.shtml)