Elon Musk is no stranger to controversy but the Tesla boss probably wasn’t expecting such a firestorm when he penned a Twitter post about taking the electric-car maker private, claiming that he had “funding secured” for a buyout.
The tweet sent Tesla shares soaring, closing 11% higher on the day. But it also prompted the Securities and Exchange Commission to look into the accuracy of the advice and why it was not being disclosed in a regulatory filing.
Over in China the actor Huang Xiaoming is also embroiled in a controversy over stock price manipulation, albeit without quite the same level of international attention.
Last week, the Economic Observer reported that investigators had questioned Huang, 40, the husband of fellow acting star Angelababy, after allegations that he had been involved in stock ramping.
Back in July, the country’s securities regulator, found that Gao Yong, a private wealth manager had made profits of Rmb897 million ($130.24 million) by manipulating the stock price of Shenzhen-listed Jinghua Pharmaceutical. He is alleged to have driven up the price of the stock of the vaccine maker and then sold it, a process known as a “pump and dump”. The regulators claimed that Gao manipulated the share price through 16 stock-trading accounts that were not in his name but which he controlled. One of the accounts belonged to Huang.
“Although lending stockbroking accounts to other traders contravenes the spirit of the country’s Securities Law, which specifies that any trading should be based on a real-name system, such behaviour is common practice in China,” Tang Xin, a professor at Tsinghua University, told Caixin.
Thankfully for Huang, the evidence seems to suggest he was unaware of the manipulation and so he probably won’t be held accountable.
The actor later apologised for his “careless” financial management.
Still, Beijing News was unimpressed, reckoning Huang was typical of the type of investor trying to make a quick buck.
“These high net-worth individuals enter and exit the market so quickly, taking all the cash, while small retail investors try to keep up but end up being stuck,” Huxiu, a portal, added. “This is the reason companies struggle to find stable growth. It is because the market rewards such behaviour.”
A number of Chinese celebrities have a poor reputation for dabbling in the stock market, including actress-director Zhao Wei, also Huang’s former classmate at the School of Performing Arts in Beijing. She was banned from the securities market for five years last year for misleading investors with inaccurate information about a botched attempt to acquire animation studio Zhejiang Wanjia.
“The Little Swallow has now turned into a black crow,” one netizen said at the time, referring to Zhao’s role as Little Swallow in the acclaimed television drama My Fair Princess.
And then there is actress Fan Bingbing, who has been caught up in a storm of allegations about tax evasion.
Back in May, former TV presenter Cui Yongyuan posted contracts on Sina Weibo said to show that Fan had received a hidden payment of Rmb50 million for starring in a film in addition to her taxable fee of Rmb10 million.
The actress has denied the allegations but the tax authorities took the opportunity to launch a wider investigation into the use of business contracts to evade taxes in the entertainment industry (see WiC412).
More recently, the Economic Observer reported that Fan’s case is under police review, which hints that it may have moved to another level.
“Now that the police are involved it suggests that during the course of the investigation, evidence of serious tax evasion is likely to have been discovered and so they have to transfer the case to the public security department. However, it is worth noting that filing the case with the police does not mean a crime has been committed, everything is still subject to the review by relevant departments,” commented National Business Daily, hedging its bets on the outcome of the case.
As part of the investigation the actress and her brother Fan Chengcheng are reportedly barred from leaving the country.
She has also been ‘missing in action’ from her social media accounts and has failed to update her personal weibo for more than 10 weeks (very out of the character for a person who usually feels the need to post daily updates to her millions of fans).
Fan has also stopped contributing on Xiaohungshu (known in English as Little Red Book; see WiC413), a leading social media and e-commerce platform, since the scandal came to light.
Her film career has been put on hold as well. For instance, fantasy drama L.O.R.D: Legend of Ravaging Dynasties, in which she has the lead role, has been postponed indefinitely due to what the studio calls “production delays”.
Other producers and advertisers have been quick to distance themselves from Fan. Chinese action drama Unbreakable Spirit, which stars Bruce Willis, has airbrushed Fan – who has a cameo role in the film – out of its promotional posters and marketing materials.
Diamond brand De Beers, which hired her as a spokesperson, has also stopped using Fan in its Chinese promotional activities.
“Until she is thoroughly proven to be innocent” brands will have to be cautious, an industry observer told Economic Observer. “After all, a celebrity endorsement means that the brand is giving its image to the artist too.”
Fan topped Forbes 2017 Chinese celebrity earners list with Rmb300 million; Angelababy ranked eighth on Rmb200 million.
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