Chinese e-scooter startup Niu’s CEO and founder Li Yinan stood trial on Monday in Shenzhen for illegal trading with insider information.
There have been rumors since the end of 2015 that Li is under the investigation of the China Securities Regulatory Committee (CSRC), but Niu denied them, saying Li was in the US recovering from illness. According to Caixin, Li has been detained by authorities in Shenzhen since June. Niu could not be reached for comment by the time of publication.
The illegal trading took place while Li was working at GSR Ventures, an investment firm he started in 2004. According to Caixin, Li contacted Li Xiaotao, the president of Huazhong CNC multiple times while the company was undergoing an M&A from February to May 2014, receiving tips that he then used to buy Huazhong stock.
In April 2014, he used the stock accounts of his sister to make around RMB 11.5 million (USD 1.7 million) in trades, earning around RMB five million. He also allegedly persuaded his sister to buy the same stock, earning around RMB 2.4 million.
Li has denied these charges, saying he wasn’t very well acquainted with the president of Huazhong CNC and that he never told his sister to buy the stocks.
Li had an illustrious career prior to these allegations, becoming the vice-president of Huawei at age 27, serving as Baidu’s first CTO, working as the CEO of 12580, a service platform under China Mobile, and founding Harbour Networks, which was later acquired by Huawei. Li started Niu in May 2015, saying it would be his last venture.
Niu is a startup that aims to produce quality electric scooters for the Chinese market. It landed USD 50 million from investors including IDG, GGV and Sequoia last July. In a flash sale in October, Niu announced that it sold 20,000 units of its flagship N1 model in 15 hours and brought in 100 million RMB.
Later on Wednesday, Niu posted a statement on Sina Weibo saying they are operating as normal. “Mr. Li Yinan is currently assisting the Justice Department with their investigation in his previous personal matters. Mr. Li can still be involved in important issues at the company, and the company is operating as normal,” it wrote.
(Top photo: N1 release. From toodaylab.com)
*Story updated on Thursday with statement from Niu