The Shanxi Securities Regulatory Bureau has imposed a combined fine of 1.3 million yuan (approximately $180,000) on Donghui Group and its financial head, Sun Yajun, for orchestrating a sophisticated 'stealth' shareholding scheme. Between 2019 and 2022, the group utilized ten separate brokerage accounts to covertly accumulate a significant stake in Kexin Development, a Shanghai-listed construction and media firm. By fragmenting their holdings across multiple proxies, Donghui Group successfully bypassed China’s mandatory disclosure threshold of 5%—a move designed to keep the market in the dark about their growing influence.
Under Chinese Securities Law, investors must disclose their identity and intentions once their holdings reach 5% of a company’s voting shares and report subsequent 1% changes. Donghui Group ignored these requirements, reaching a 5.33% stake by August 2022 and continuing to buy through bulk trades until they held 7.64% of the company. Regulatory investigators used a combination of bank transfer records, IP terminal tracking, and internal testimonies to link the accounts, proving that the trading decisions and funding originated solely from Donghui Group.
This regulatory crackdown occurs as Kexin Development experiences a dramatic and fundamentally questionable surge in its stock price. Despite the company reporting a loss of 17.17 million yuan in 2025 and continued deficits in early 2026, its share price more than doubled from 14.38 to 32.02 yuan in just two months. The company itself has issued warnings to investors, noting that its performance in the competitive construction industry is deteriorating and that the market valuation has deviated severely from its underlying financials.
In a strategic move characteristic of struggling Chinese firms looking to capitalize on market trends, Kexin Development recently announced a pivot toward the technology sector. The company plans to inject 169 million yuan into a computing power subsidiary, Payan Technology, focused on server leasing and AI infrastructure. While this pivot may explain some of the speculative interest, analysts suggest that the revelation of a hidden major shareholder like Donghui Group often signals impending corporate restructuring or hostile takeover attempts, adding a layer of volatility for retail investors.