Jinzi Ham's trader lost $8.7M on hog futures, his father-in-law repaid most of it

Jinzi Ham Co., Ltd. (stock code 002515.SZ) is a Chinese meat processor based in Jinhua, Zhejiang province, best known for its Jinhua ham products. The company was listed on the Shenzhen Stock Exchange with a market capitalisation of around 2 billion yuan.

In September 2021, a futures trader at Jinzi Ham sold 902 hog futures contracts without authorisation from the company's decision-making team. The unauthorised trades were made when hog futures prices were plunging, and the trader incurred losses of 55.1 million yuan ($8.7 million). The trader's father-in-law, who holds a 3.45% stake in the company and is the brother of former chairman Shi Yanjun, helped repay 47 million yuan of the total loss.

The company terminated the trader and held him personally liable for the remaining losses. However, the company failed to disclose the significant futures trading losses in its third-quarter 2021 financial report, which was later found to be inaccurate. On 10 March 2022, the Zhejiang Securities Regulatory Bureau discovered the violations during a routine inspection and opened a fraud investigation. The CSRC issued warning letters and blacklisted the responsible executives in the securities and futures market integrity files.

Jinzi Ham's stock price plunged 9.94% on the day the probe was announced and had lost 30% of its value since January 2022. The company's 2021 annual results showed a 27.7% profit decline to 42.8 million yuan and a 28.7% revenue drop to 506 million yuan, attributed to falling pork prices.