Mr Zhonghan Wu (also known as John Wu), former chief financial officer of Traditional Therapy Clinics Limited (TTC), has been sentenced in the District Court of New South Wales to one year and 10 months imprisonment after pleading guilty to market manipulation.
Mr Wu is on bail and has been ordered to attend Community Corrections for an Intensive Correction Order assessment, the outcome of which will be considered on 2 July 2021, in the District Court.
Mr Wu was also sentenced to a Community Corrections Order for a period of two years and six months after pleading guilty to fraud offences.
An ASIC investigation found between 8 September 2015 and 30 November 2015, Mr Wu carried out and attempted to carry out, multiple share transactions in TTC shares using four different trading accounts. The trading had the effect of creating an artificial price for TTC shares on the Australian Securities Exchange (ASX). When trades in one trading account were rejected for suspicious trading, Mr Wu would use another trading account to continue trading in TTC shares.
Mr Wu’s trading occurred immediately after TTC’s listing on the ASX, following an initial public offering (IPO) in August 2015 that raised approximately $15m through the issuance of 30 million TTC shares at $0.50 a share. Mr Wu carried out the transactions in order to maintain the TTC share price above the IPO issue price of $0.50 per share.
In addition to the market manipulation offence, Mr Wu has also been found guilty of fraud. In 2012 and 2015, Mr Wu obtained loans from the Commonwealth Bank of Australia (CBA) for mortgages to purchase various properties. In support of his loan applications, Mr Wu provided false and misleading documents to CBA. The loan applications resulted in Mr Wu receiving funds totalling $390,000 in 2012 and $260,000 in 2015.
In sentencing, His Honour Judge Buscombe found Mr Wu’s trading undermined the integrity of the market and that he engaged in a rather brazen campaign of price manipulation that he knew was wrong and illegal.
The matter was prosecuted by Commonwealth Director of Public Prosecutions after a referral from ASIC.
Between 1 March 2015 and 18 March 2016, Mr Wu was employed as chief financial officer at TTC. TTC’s main business operations are in China. It is a franchisor and owner of traditional therapeutic health and wellness clinics under the ‘Fuqiao’ brand.
On 3 September 2015, TTC was admitted to the official list of the ASX following the company raising $15m through the IPO.
On 17 December 2018, TTC was de-listed from the ASX and on 29 January 2019, a liquidator was appointed to TTC.
On 9 June 2020, Mr Wu was charged with market manipulation and fraud offences.
On 19 January 2021, Mr Wu entered a plea of guilty to one charge of market manipulation and two fraud charges.
The market manipulation matter is adjourned to 2 July 2021, for the outcome of the Intensive Correction Order assessment.