On August 9th, it was reported that the media has recently revealed details of the six-year interest transfer between Li Cheng, the director of quantitative private equity giant Huanfang Quantitative Market, and employees of China Merchants Securities. This incident also uncovered the truth behind the rumor in November last year that "Huanfang Quantitative employees were arrested for involvement in brokerage rebates".
According to reports, Li Cheng used to work at China Merchants Securities, or based on business and personal relationships, Huanfang Quantitative concentrated some high-frequency and large-scale transactions in the China Merchants Securities business department. However, directly refunding commissions to clients by securities firms is a behavior prohibited by regulations. In order to avoid regulation, Li Cheng and Meng Pengfei, former general manager of the Shennan East Road branch of China Merchants Securities, designed a "curve rebate" plan. The specific operation is for Meng Pengfei's relatives to serve as the exclusive brokers of the magic square, import the quantified transactions of the magic square into the designated business department, and then collect performance bonuses through the relatives' bank cards. Between 2018 and 2023, the two individuals accumulated a total amount of 118 million yuan, of which over 20 million yuan flowed into Li Cheng's personal account.
It is worth mentioning that in this case, before the incident, Meng Pengfei had handed over 3 million yuan worth of gold to Gao Xiang, the then head of China Merchants Securities Shenzhen Branch, in an attempt to seek "protection". Although Gao Xiang returned the gold, he was still under investigation for suspected dereliction of duty on May 30th this year.
According to public information, Huanfang Quantitative is a leading quantitative private equity firm in China, having once been listed as one of the "Big Four Quantitative Kings". One of its founders, Li Cheng, has been investigated for involvement in "brokerage rebates". Magic Square Quantization is also the parent company of the large model DeepSeek. In April 2023, Magic Cube established DeepSeek company; In January of this year, DeepSeek launched the large model R1, which received widespread attention for its super performance and low training cost.
