Core Viewpoint - The unusual stock price movements of Huali Co. and Shenghui Clean suggest potential insider trading, prompting regulatory scrutiny due to the timing of the acquisition announcement and prior stock price surges [2][3][5]. Group 1: Stock Price Movements - On January 16, Huali Co. announced plans to acquire a 19% stake in Shenghui Clean for HKD 47.5 million, while both companies' stock prices surged prior to the announcement, with Huali Co. hitting the daily limit and Shenghui Clean rising by 26.19% [2]. - The stock price of Shenghui Clean increased significantly before the acquisition agreement was disclosed, raising questions about the timing and the nature of the trading activity [3]. - Following the announcement, both companies experienced sharp declines in their stock prices, with Huali Co. dropping by 5.39% and Shenghui Clean by 33.96% [2]. Group 2: Acquisition Pricing and Market Reactions - The acquisition price of HKD 47.5 million is significantly lower than the market value of Shenghui Clean's 19% stake, which is approximately HKD 393 million, raising concerns about the rationale behind the pricing [3]. - The acquisition price is below Shenghui Clean's historical lowest price and its net asset value, indicating a "broken net" acquisition [3]. - The unusual timing of stock price increases and the subsequent drop post-announcement highlight potential issues with market transparency and the need for regulatory oversight [4][5]. Group 3: Regulatory Response - Regulatory authorities have requested Huali Co. to disclose specific timelines and participant details related to the acquisition, as well as to review recent trading records of key stakeholders to investigate possible insider trading [5]. - The incident underscores the challenges in detecting insider trading, as it involves a wide range of parties, including management, accounting firms, and financial advisors [4][5]. - Ensuring transparency and adherence to information disclosure regulations is crucial for maintaining market integrity and protecting ordinary investors [5].