Hikvision CEO And Vice-Chair Under PRC Government Investigation

By: John Honovich and Charles Rollet, Published on Nov 14, 2019

In a surprising and globally covered move, Hikvision CEO Hu Yangzhong and Vice-Chairman Gong Hongjia are being investigated by China's securities regulator for "suspected information disclosure violations", Hikvision disclosed in a brief letter to investors.

This move was quickly reported around the world, with few details, ranging from:

Reuters: One of China's richest men named in Hikvision securities probe
CNBC: Chinese securities regulator names 2 directors of surveillance camera giant Hikvision in investigation
Bloomberg: China Probes Billionaire Exec at U.S.-Blacklisted Hikvision
Caixin (top PRC business outlet): Two Billionaire Hikvision Directors Embroiled in Disclosure Investigation

Indeed, even PRC state-media Global Times covered it:

No one has publicly made clear how serious this 'suspicion of illegal information disclosure' is.

However, one thing not being reported by global media is the importance of Hu Yangzhong or "Mr. Hu" as he is reverentially referred to by Hikvision employees who have spoken to us over the years.

The move is surprising given that state-controlled Hikvision has extensive PRC government connections and is currently a high-profile target of US government human rights sanctions.

While Hikvision (the company) is distancing itself, Hu Yangzhong has long played a central role leading the firm, meaning this could have a significant impact regardless. In this note, we examine this investigation, including:

Few Official Details/Undisclosed Bonus Allegations
Hikvision Response: Individuals, Not Company, Under Investigation
Impact is Clear
Terrible Timing for Hikvision
Political Factors at Play?
Legal Consequences
Investigation Widely Reported in West and PRC
Hikvision Stock Impact
Unwelcome Development in Home Market

** * ********** *** globally ******* ****, ********* CEO ** ********* *** Vice-Chairman **** ******* *** being ************ ** *****'* securities ********* *** "********* information ********** **********", ****************** ** * ***** letter ** *********.

**** **** *** ******* reported ****** *** *****, with *** *******, ******* from:

*******:*** ** *****'* ******* men ***** ** ********* securities *****
****:******* ********** ********* ***** 2 ********* ** ************ camera ***** ********* ** investigation
*********:***** ****** *********** **** at *.*.-*********** *********
****** (*** *** ******** outlet):*** *********** ********* ********* Embroiled ** ********** *************

******, ******* *****-***** ****** ***** covered **:

** *** *** ******** made ***** *** ******* this '********* ** ******* information **********' **.

*******, *** ***** *** being ******** ** ****** media ** *** ********** of ** ********* ** "Mr. **" ** ** is ************* ******** ** by ********* ********* *** have ****** ** ** over *** *****.

*** **** ** ********** given *********-******************* *** ********* *** government *********** *** ** currently * ****-******* ****** of ** ********** ***** rights*********.

***** ********* (*** *******) is ********** ******, ** Yangzhong *** **** ****** a ******* **** ******* the ****, ******* **** could **** * *********** impact **********. ** **** note, ** ******* **** investigation, *********:

*** ******** *******/*********** ***** Allegations
********* ********: ***********, *** Company, ***** *************
****** ** *****
******** ****** *** *********
********* ******* ** ****?
***** ************
************* ****** ******** ** West *** ***
********* ***** ******
********* *********** ** **** Market

[***************]

Few ******** *******, ******** ******* ** *********** *******

*********'* **************** *** ************* ******** no ******* ******* ***** the *************'* ******, ****** the **** **** **'* related ** ********** ** mandatory ********** ************.

*******,******* ************* ** ********* ******* that *** ************* "********* to *** **** ******* of ** ******** ***** plan [***] *** **** declared". ******* *********** **** reported ***** ******** **** ****** Securities *****:

**. **** **** **** because *** *******'* *********** is ******, ** **** some ********** ** *** employees, *** *** *** disclose ** ** *** stock ********.

********** ***** *** *** mention *** ** ********* was ***** ************ ** well. **** ***** ********* about ***** ****** *** we *** *** ******* a ******** ** ****.

UPDATE: ****'* ****** ********* **** ****** ** *************

********** ***** **** ********** ********* ********* ***** stated *** ************* ** directed ** ****'* ***** incentive ****:

*** ************* ** **** case ** ******** **Mr. **** *******'* ******** *************, which will not affect his normal performance in the company, and the company's production and operation activities will not be affected. The ******** ************ *** ******* ** *** ****** ********* **** ******** *** *********** ** *** ******* *** *** **** ********** ***** ** *********, and has nothing to do with the company and other directors, supervisors and senior managers of the company. Mr. Gong Hongjia will actively cooperate with the investigation work of the China Securities Regulatory Commission and fulfill the information disclosure obligations in strict accordance with the regulatory requirements. Special announcement. [emphasis added]

********** ***** ** ********** an ************* ****** ** it ** ************* ***** ********** *****'* ******** *********, the ***** ********** ********** Commission.

Bonuses **********

********* ******* ********* ******** ****** ********* plan ** * *********** advantage. *******, **** *********'* stock ***** **** ****** 25% ***** *** **** peak *** ******* ****** more ********** **** **** before, **** ** ****** pressure, ********** **** **** complaints ** ***** ******* conditions:

********, ********** ** ** *** company *** ********* ****** 9:00, *** ******* *** off **** ***** *:** in *** *******
** ******,*** ******* ****** ********* is ***** **** *** old *********.
*******, *********'********** ** *** **** BAT ****** *** **** Internet *********.

**** **** ** **** seen **** ******* *******, Hikvision **** ********* '***' ********** ******* trend- **** ********* **** 6 **** * ****, 12 ***** * *** so **** ** ********* not ****** ** *********. However, **** *****'* ************ overall *******, **** *** created *** ********** ** encourage ********* ** **** such ********* ********* ** the *******, ***** ** stock *****, ** *** sufficient.

Hikvision ********: ***********, *** *******, *** ***** *************

********* **** **** **** this ***** *** **** targeting *** *** *********** - ** ********* *** Gong ******* - ****** than ********* ******:

*** ******** ** ************* from **** [***** ********** ********** **********] **** ******** *** mentioned ***** ****** ***********, instead ** ** *** company. ********* ******** *********** disclosure *********** ********** **** regulatory *********** ********.

**** ** *********** **** but ********* ****** ***** the ********** ** **. Hu ** *********.

Hu ****** ** *****

*** ************* ** ** Yanghzong ***** * ****** to *** **** ***** his ******* **** ** managing *** ******* *** the **** ** *** clear ********** ** ***.

*** ********* ** ********* employees ** **** ****** with **** *** **** decade ** **** **. Hu ** *** ****** of *********'* ********** *** decisions.

********, **. **, ********* to ***** *********'* *********, is *** ********** ****** of *********'* ************* ******** growth ***, ******, ********* employees **** ********* ********* respect *** **** ***** and *****.

Gong **** *********

** ********, *** ************* of **** ******* ** far **** ******** ** Hikvision's **********. ***** **** has * ****** "**** chairman" *****, **** ***** Hikvision ******** ***** ****** role ** ******** ******** the *******. ** *** media, ** ** ******* known ** "*** **** ****" *** ************ ******* out *** *****.

Major ************

**** *** *** ***** Hikvision ************. ** ********* directly **** *.**% ** Hikvision, ***** ** ********* worth ***** $*** *******, according ** *********'*** **** ******. **** ******* ******** owns **.**% ** *********, currently ***** ***** $* billion. ***** **** ** far ****** **** **, Hu ** *** **** vital ** *********'* **********.

Poor ****** *** *********

** ** ********** *** the *** ********** ** publicly ****** **** ************* at **** * ******** juncture *** *********. *** company ************* ** *** ** government **** ***** ********** * ***** *** and *** ** ****** access ** ****** *****/**. It ** *** ****** a******* ** ********** ************ ******** ***********.

Strange ***** *********'* *** *** ***********, ********* ******* ********

********* *** ****** ****** extremely ****-********* *********** ** China, **** *********** * *** ********** delegate*** ******* ***** ** support **** *** *** officials (********** ********** ******* ********* For ********* ** *******,********* ********** ** ******* Visit).

*** ********** ***** ** that ********* *** ****** political ***** ************* **** ***** ***** such * ****** **** of **** ** *****.

Chairman **** - ***** ** **?

***** ***** *** ***** members *** ********** ** the *************, *******, *********** ** *** *****, Chen ********, *** **** ** Mr. **, *** *******'* Communist ***** ********* *** NPC ********, ** ***.

**** ** ******** *** Hikvision ** **** ** is **** **** **** but ** ** ******* to ** *** **** relates ** **** ********* 'illegal *********** **********'. *** Chen *** **** ***** it? ***** **** *** help ** ** ******** from **** ****** *************?

Potential ***** ************

********* ** ************* *** ** *** PRC, *** ********** ********* can ****** ************** ********* (such ** *****), *** if *** ********** ****** to ******** ****, "** shall ******** *** ****" to * ******** ******** court.

Stock ******

*********'* ***** **** ****** 5% ** *** **** but **** ****** **** part ** *** ****, ending *** ******* *** down *.*%:

Outlook *******

****** *** **** ********* about *** ***** ****** of **** ************* ** the ******** ***** ****** is ********* ** *******.

*** ****-**** ******** *** Hikvision ** **** **** is * ***** **** nuisance *** **. **, no ***** ****** ** taken ******* **. **, and *** **** **** is ***** ** *** investigation. ** **, ****** will **** ****** ***** this.

*******, ** *** ************* undermines *** ******* ** Mr. ** ** ******* Hikvision, ** ***** ******** the ********** ** * company ******* ***** *********** overseas ******.

Vote / ****

Comments (5)

Anthony Jones

11/14/19 02:05pm

**** ** ******** **** a **** ** **** face. ***** **** **** be **** ** **** guys, **** *** *****. Hikvision **** ******* **** removed *** *** *****. Yadda, *****, *****.

John Honovich

IPVM | In reply to Anthony Jones | 11/14/19 03:14pm

***** **** **** ** used ** **** ****

**'* ******** *** * don't *** **. **. Hu, ** *** ********, seems ** ** * strong ******** *** *********. How *** ********* ** better *** **** * weakened ** ******* **. Hu? ******* ********, ****** with *****?

Ross Vander Klok

IPVMU Certified | In reply to Anthony Jones | 11/14/19 06:36pm

* *****. * ***** the **** **** ********** this ** *** ***** those *** *** *******. Probably *** ** ****** all ***** ***** "*** the ******" *** ******* them ****.

Undisclosed Integrator #1

11/14/19 10:33pm

***** *****... **** ************ disclosed ** *** **** that **** **** ******** analytics ** ******** *******?

Charles Rollet

12/06/19 04:19am

******: ***** ***** *** no *** ******** ************* about **** *************, ** continues ** ** *********/********** about ** *** *****.

*** ******** ******** *****, a ******** *********, ********* an******* *************** *** **** **** Hongjia *** ** ********* have *** ******** ***** transactions ******* **** ***** in *** ****, **** Gong *********** ********* *** Hu ********** ***. *** NBD ********** **** ***** have *** ** ** obtaining ***** ***** *** table, *********** ** *****-****-****** prices.

*** *********** **** ** that *** ** *** stock ****** ************ (************ for *****-****** ***** **** Hikvision,) ****** ********* ******** were ****** ** *** their **** ***** *******, so **** *** ** out ** *** *** pocket ******* ******** ********* this.

****** ****** ******* ********** ******* *****, ****** **** **** if **** **** **** stock ** **** *****, the ******** ** ******* it *** **** ** a ***** ********* ***:

** ** ***** *** the **** ** *** the ******** * *** envelope [****]? ** ****,it ** ******** ** ** *** ****** **** **** ********** ** *** ** *** ****** *** *****.

*******, * ******** **** outlet ****** ****** **************** ** ************** *** ******* ************* between ** *********'* ******** salary ** ****-**** *** his ***** ***** ********* around **** *** ****.

*** **** **** **** case ** ***** *********/********** about ** *** ***** is ******* - **** is * ******* **** some ** *** *****'********************. ***** ***** ** no ****** ***** ** this *********, ** ***** be ******** ** *************** with ******* ********* ****** from *** *** **********'* higher ********.

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