When it comes to Valentine’s Day gestures, posting wedding day photos on social media is a touching yet commonplace occurrence. For Liu Liang, the CEO and major shareholder of online gaming firm U9, there was another motive at work.
This February 14, Liu posted a series of photos from his 2015 wedding to Dai Lin, a colleague and president of the Shanghai-listed firm, to underline the fact that matrimony had cost the couple Rmb4.8 billion ($720 million).
Was the Shaanxi native highlighting an extreme example of the kind of conspicuous consumption satirised in the novel and movie Crazy Rich Asians? If that were his aim, then his wedding would have propelled the couple near to the top of the list for the most expensive nuptials ever held.
But Liu’s words were laced with bitter feelings instead of fond memories. He was actually trying to underscore the nightmare the couple say they have found themselves in since stock market watchdogs got wind of their wedding.
What went wrong? Dai, the bride, was the third largest shareholder of U9 and so by tying the knot with fellow top stockholder Liu the couple became a concerted party and news of their wedding was deemed to be sensitive market information.
However, they had not made the disclosure within three days as required by regulators, which promptly initiated an investigation into U9 (the wedding took place in January 2015, when Chinese stocks were about to go on a hyper bullish run before an epic ‘Great Fall of China’, see WiC293).
They were only fined a Rmb300,000 each. However, Chinese stock market rules prevent under-probe shareholders from selling down their stakes for six months and, during the lock-up period, the market value of Liu and his wife’s combined 19.6% stake in U9 dropped by Rmb4.8 billion to just Rmb1.2 billion. This explains Liu’s Valentine’s Day post.
Liu now blames the couple’s misfortunes on a “wicked person” who plunged them into the “depths of winter” after reporting them to the regulator.
He continues to protest their innocence on the grounds that they were in the process of sorting out their shareholdings so there was no need to inform the regulator.
A number of minority shareholders who lost money are still suing the company for compensation.
U9 is also under threat of delisting since it has also broken the exchange’s ‘two-year no-profit’ rule. Indeed, it looks very much like a case of “until death us do part” as U9 made losses of Rmb400 million in 2017 and it has announced an expected net loss of Rmb883 million in 2018.
But onlookers are showing little sympathy. “You violated the law,” says one netzien. “You were wrong so why are you complaining about it now?” As for U9’s fortunes, it looks like Liu and Dai will have to accept the traditional vow of “for richer or poorer, in sickness and in health”.
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