Author | Liu Yinping

Editor | Fu Ying, Gao Yuanshan

Source | Dujiang Finance

Five years ago, Yang Lin (pseudonym) was still standing at the respectable threshold of middle-class life in Beijing—privileged family background, good education, and a career that drew attention—until an unexpected stock price “avalanche” struck.

In 2020, Yang Lin and her family heavily invested in “Rendong Holdings” through a margin account. Initially, the account balance kept rising rapidly, like a snowball rolling bigger and bigger. In the winter of 2020, the snowball suddenly collapsed—14 days, 14 limit-down days—no escape, no stop-loss options—her account was wiped out.

Over ten million yuan in funds turned negative in just a few days. Still reeling from the huge loss, she faced nearly ten million yuan in recovery claims from China Galaxy Securities (601881.SH).

She lost the first trial, lost again in the appeal. But she didn’t stop—she studied securities laws and regulations, organized trading records, filed complaints with regulators… Over the past five years, her life has been deeply intertwined with that stock. To this day, she continues to fight over this margin trading dispute, trying to prove she is also a victim. Even after losing the case, she persists in her stance.

Under the avalanche, no snowflake is innocent.

1

Borrowed millions to trade stocks and wiped out,

After losing her principal, she owed Galaxy Securities over 9 million yuan

During the dramatic stock price collapse of Rendong Holdings, only those who experienced it firsthand know that it was the result of years of family savings and efforts, exchanged for an unpayable debt after gambling with capital.

In 2020, Yang Lin’s family of four—herself, her husband, and elderly parents—all opened margin accounts with Galaxy Securities and heavily invested in Rendong Holdings. According to her, each person invested over 3 million yuan of principal, borrowing about 4 million yuan from Galaxy Securities. This is just her family’s account situation; the total principal and financing for the family exceeded ten million yuan.

When the stock price collapsed, their accounts’ maintenance margin ratio quickly fell below the liquidation threshold. Although Galaxy Securities issued a margin call the next day, in the face of continuous limit-downs and liquidity exhaustion, the forced liquidation order was effectively meaningless.

After 14 consecutive limit-down days, on December 15, 2020, the heavily leveraged Rendong Holdings stock was finally liquidated. But before she could recover from the dizzying loss, a harsher reality appeared: not only had they lost their principal of over ten million yuan, but after the court’s ruling, the remaining funds in the account were seized by Galaxy Securities, leaving the four of them owing over 9 million yuan in margin debt.

In March and October 2021, Galaxy Securities sued Yang Lin, her husband, and parents in Beijing Xicheng District People’s Court, demanding repayment of all debts.

This image may be AI-generated source: Canned图库

In court, Yang Lin’s family was in despair. They argued that Galaxy Securities had violated regulations first, the defendants had moderate income and low to medium risk appetite, but the plaintiffs’ risk assessment answers indicated an aggressive level, thus meeting account opening requirements. Yang Lin denied the authenticity of her signatures on the “Margin Trading and Short Selling Risk Disclosure,” “Investor Education Record,” and “Suitability Assessment Confirmation.” Her husband admitted signing the investor education record but denied receiving relevant training; similar falsifications were alleged regarding her parents’ documents.

Yang Lin and her family believed that Galaxy Securities forged signatures, provided insufficient risk warnings, and aimed to induce account opening to earn commissions. They requested liability reduction and sought handwriting authentication of the signatures.

Source: Court Judgment Website

It’s noteworthy that when opening the margin account, Yang Lin’s mother was over seventy, and her father was nearly 70. Their prior risk assessments were only “moderate” or “conservative,” which did not meet the high-risk capacity required for margin trading accounts. Although industry regulations do not restrict opening margin accounts for investors over 70, securities firms tend to be more cautious with such clients.

Yang Lin repeatedly mentioned in the case that her parents were induced to open margin accounts despite insufficient risk capacity, with staff forging related documents and forms. Feedback from regulatory authorities after the case indicated that Qingdao Haikou Road Securities Branch indeed had issues such as employing non-regular staff and improper operations.

Galaxy Securities stated that, at account opening, they disclosed the risks of margin trading and did not recommend high-risk investors to open such accounts, and that investors were aware and voluntarily assumed the risks. Before opening the account, Yang Lin’s mother completed an online risk assessment, which classified her as relatively aggressive.

During the first trial, Yang Lin did not present more favorable evidence. In 2022, the court ruled against Yang Lin’s family, requiring full repayment, based on the fact that their signing of the “Margin Trading Contract” reflected their true intent, and Galaxy Securities had fulfilled its suitability obligations. Under these circumstances, the request for handwriting authentication was deemed unnecessary.

Unhappy with the verdict, they appealed to Beijing Financial Court. During the second trial, Yang Lin obtained more evidence, including account opening records, risk assessments, investor education records, and regulatory feedback, which the Beijing Securities Regulatory Bureau recognized as indicating misconduct by Galaxy Securities’ staff.

However, the court upheld the first-instance judgment. In the live “dual recording” video, Galaxy Securities clearly mentioned the risks involved, investors acknowledged understanding, and they had engaged in multiple stock trades and adjusted margin rates, with the contracts deemed legal.

Source: Canned图库

Yang Lin also argued that when stock prices hit limit-downs and her account faced a margin call, the broker failed to take timely and effective forced liquidation measures, causing her losses to worsen.

According to the “Margin Trading and Short Selling Contract,” when the margin account’s maintenance ratio fell below 130% of the required level, Galaxy Securities should execute forced liquidation within T+2 days (i.e., December 7, 2020). The investor believed that although she placed sell orders herself, the securities company could still forcibly liquidate her account with priority over her own orders, and the transaction would be executed preferentially.

Yu Fenghui, a special researcher at China Financial Think Tank, opined that when stock prices hit consecutive limit-downs, preventing investors from executing sell orders, securities firms have the right to prioritize forced liquidation, which has priority in execution. This is to prevent additional risks to securities firms caused by market volatility.

In fact, some investors stated that on December 4, 2020, when Rendong Holdings hit its eighth limit-down, they managed to escape using Huaxin Securities’ fast-track channel, selling at 25.9 yuan per share. Yang Lin’s liquidation occurred when the stock price was below 13 yuan.

Galaxy Securities claimed that the investor had already sold securities to repay the loan, and the stock available for sale was zero, so the firm could not forcibly liquidate.

Despite Yang Lin providing more evidence, and some of her complaints being recognized by regulators, the related branch was penalized for violations. But in the judicial case against Galaxy Securities, she still lost.

In the second-instance judgment issued in late 2023 by Beijing Financial Court, the original ruling was upheld. According to the final judgment, Yang Lin, her husband, and parents are required to repay Galaxy Securities a principal of 9.66 million yuan, interest of 115,900 yuan, plus penalty interest, legal fees, and over ten thousand yuan in litigation costs.

More than two years after the judgment took effect, Yang Lin did not give up. She repeatedly organized case materials, filed complaints with the CSRC and other regulators, seeking a turnaround outside the judicial process. Despite the legal defeat, she insists that the root of this tragedy lies in the broker’s neglect of suitability management. However, outside opinions suggest that Yang Lin’s family’s aggressive investments beyond their risk capacity were also a key factor in the tragedy.

2

The saga of “monster stocks” and pitfalls

The “monster stock” that Yang Lin’s family fell into—Rendong Holdings—is a fintech company mainly engaged in payments, once a “star stock” on the Shenzhen Stock Exchange’s main board.

Rewinding to late 2019, Rendong Holdings was still a dazzling star in the market. This third-party payment company began soaring at the end of 2019, with its stock price quadrupling within a year. On November 20, 2020, its intraday high reached 64.72 yuan per share.

Behind the soaring stock price, Rendong Holdings’ fundamentals were far from optimistic. In 2019 and the first three quarters of 2020, the company reported losses exceeding 20 million yuan, and faced overdue loans and liquidity issues. Despite this, the stock kept rising, seemingly driven by speculation: in November 2019, Beijing Haidian Guozi Haike Jin Group took a controlling stake, fueling market hopes of state backing.

Source: Canned图库

It was at this peak—December 2019—that Yang Lin, using her margin account opened in 2016, first bought Rendong Holdings shares.

By August 2020, after the stock had risen for over half a year, Yang Lin’s husband and parents opened margin accounts at Beijing Xueqing Road Securities Branch (later renamed “Beijing North Fourth Ring Securities”) and Qingdao Nanjing Road Securities Branch (later “Qingdao Haikou Road Securities”). Starting in August, they gradually entered the market, adding positions multiple times, tying the family’s wealth to this “hot stock.”

At that time, many margin traders like Yang Lin’s family were involved. The margin balance of Rendong Holdings surged from 1.354 billion yuan at the end of June 2020 to over 3.4 billion yuan by mid-November—a frenzy of capital.

But all good things come to an end suddenly. On November 18, 2020, an announcement revealed that Haidian Guozi Haike Jin Group’s custody period had expired and would not be renewed; the actual controller reverted to the original owner, Huo Dong. Market confidence collapsed instantly, and from November 25, Rendong Holdings’ stock price plunged with 14 consecutive limit-downs.

Yang Lin’s accounts quickly turned red. According to court documents, as of December 3, 2020, Yang Lin’s account had a margin debt principal of 4.73 million yuan, with a loss of 2.02 million yuan, and a maintenance ratio of 118.37%; her husband’s account had a principal of 4.205 million yuan, a loss of 2.11 million yuan, and a ratio of 120.18%.

On December 4, Galaxy Securities sent a margin call SMS: if not replenished promptly, forced liquidation would start on December 7.

In despair, Yang Lin’s family placed sell orders at limit-down prices daily, but for 13 trading days, the lowest daily transaction volume was only 4.356 million yuan, and the highest was just over 21.99 million yuan. With a 3 billion yuan margin position, there was no way to escape.

Regulators intervened on December 9, suspending margin trading for Rendong Holdings on the Shenzhen Stock Exchange—at that time, the margin balance accounted for 25.79% of the free float market value.

On December 15, Rendong Holdings’ stock forum experienced a rollercoaster. After 14 days of continuous decline, the stock miraculously hit the “limit-up” (upward limit), rising from a limit-down to a limit-up in just 39 seconds. Some investors thought the worst was over and wrote “survivor’s reflections”; but most margin traders could only despair at the broker’s front desk, as 3 billion yuan of margin was fleeing, with only 1.4 billion remaining.

Following this market anomaly, the CSRC revealed the truth: “Big trader” Jing Hua controlled 83 accounts, manipulating the stock through continuous buying, wash trading, and false reporting, with the highest shareholding reaching 20.43% of the circulating shares during 384 trading days. Ultimately, this manipulation caused a loss of 2.69 billion yuan, and Jing Hua was fined 5 million yuan.

Today, Rendong Holdings has been renamed ST Rendong. In 2025, the company completed bankruptcy restructuring, introducing CITIC Capital and other investors, attempting a rebirth in the third-party payment sector, and has applied to lift the delisting warning. But for those margin traders who lost everything in the winter of 2020, many are still trapped in the aftermath of the collapse.

3

Leverage investments lead to bitter fruits

In the dispute between Galaxy Securities and Yang Lin’s family over the margin trading, the core lesson lies in the nature of leverage: margin trading is never a simple investment tool; it’s a form of borrowing to generate gains, which also amplifies risks. In reality, many margin account holders only see the potential upside, underestimating the destructive power behind leverage.

Yang Lin’s family concentrated their purchases and added positions during the continuous rise of Rendong Holdings, which itself signals danger—being caught up in the thrill of profit during a bubble, while ignoring the risk of a sudden crash.

This image may be AI-generated source: Canned图库

The biggest taboo in investing is “putting all eggs in one basket,” especially if that basket is fragile. Heavy concentration on a “monster stock” is less investment and more gambling. Rendong Holdings’ long-term surge before the collapse was detached from fundamentals. When a stock’s rise can only be described as “monster-like,” it’s often only one last straw away from crashing.

More alarmingly, some investors overly rely on financial institutions, believing brokers have a duty to safeguard them, that staff recommendations are safe, and that contracts guarantee security. But the legal and market reality is the opposite: The core of the margin contract is “buyer beware”—brokers provide tools and channels, not investment decisions or guarantees. Even if staff recommend or verbally promise during account opening, ultimately, the investor bears the risk.

Yang Lin insists that the broker was negligent. Legally, whether the broker fulfilled its suitability obligations in margin trading is worth examining. But from another perspective, investment decisions are made by the investor, stocks are bought by the investor, leverage is added by the investor, and the consequences of a margin call are ultimately borne by the investor.

No matter what product an investor purchases, they must first assess their own risk appetite, experience, expected returns, and psychological resilience, choose suitable products, and avoid overexposure to high-risk assets.

After this storm, Yang Lin’s life was forever changed. She is burdened with huge debts, studying laws, organizing data, and filing complaints—her resilience is admirable. But from another angle, the purpose of investing is to improve life, not to have life swallowed by investments. When an investment requires years to prove “I am a victim,” perhaps it was never the right path to begin with.

As the CSRC’s investigation into Rendong Holdings’ market manipulation concludes, the claims process for harmed investors opens. Investors who bought between April 28, 2020, and July 14, 2021, and still hold positions, can file claims against the company, regardless of whether they sold afterward.

However, this door is already closed for Yang Lin’s family. Their accounts were liquidated on December 15, 2020, and they no longer meet the criteria to claim against Rendong Holdings as of July 14, 2021.

4

Galaxy Securities: Facing Investor Lawsuits and Regulatory Warnings

Although Galaxy Securities emerged victorious in this lawsuit, the case also exposed many issues in its operational practices.

Investors argued that their risk level was conservative or steady, but under the inducement of Galaxy staff, they opened margin accounts and were encouraged to increase investments for commissions, with some forged investor education records and signatures. While the court did not support these claims, regulators have penalized Galaxy Securities for violations.

This image may be AI-generated source: Canned图库

According to Beijing Securities Regulatory Bureau’s reply in January 2025, no evidence of forgery was found in Galaxy Securities’ account opening process for Yang Lin’s family. However, it was found that branch staff sent answers to the “New Third Board” trading knowledge test to clients, and a warning letter was issued. This indicates that Yang Lin’s allegations of forgery were not confirmed, but staff misconduct related to the New Third Board business did occur.

Prior to this, regulators had already penalized Galaxy Securities for violations. On December 23, 2022, the Beijing Securities Regulatory Bureau issued fines for two violations, including improper conduct by staff in suitability management and margin trading.

According to the “Measures for the Management of Securities and Futures Investors’ Suitability” and the “Regulations on the Management of Securities Firms’ Margin Trading Business (2011 Revision),” Galaxy Securities was found to have violated rules in investor access and suitability management.

Following investor complaints and after the final judgment, the Qingdao Securities Regulatory Bureau conducted a special inspection of Galaxy Securities’ Qingdao Haikou Road branch from October 31, 2023, to January 19, 2024.

The inspection revealed violations such as using unregistered temporary staff to open margin accounts for Yang Lin’s parents; failing to notify clients of additional collateral requirements; and improper use of official seals during account opening, reflecting poor internal controls and compliance.

The penalty notice cited violations of the “Regulations on the Compliance Management of Securities Companies and Securities Investment Fund Management Companies,” indicating issues like insufficient client understanding, failure in suitability management, disorganized staff management, and weak internal controls.

Source: “Regulations on the Compliance Management of Securities Companies and Securities Investment Fund Management Companies”

Behind this case, China’s margin trading market is experiencing rapid expansion. In 2019 and 2020, Galaxy Securities’ margin balance reached 52.6 billion and 81.5 billion yuan respectively, with annual growth rates of 31% and 55%, maintaining a market share above 5%.

Along with growth, disputes also increased. According to Tianyancha, as of now, there have been 122 public cases involving Galaxy Securities’ margin trading disputes, peaking between 2020 and 2022. Most of these cases involve Galaxy Securities suing individual investors for repayment of margin debts.

A notable case in late 2024 involved investor Liang, who borrowed from Galaxy Securities in 2018 but faced a margin call after stock prices plummeted, resulting in a debt of over 2 million yuan. Liang claimed that the agreement was not signed by him, and some transactions were manipulated by Galaxy Securities and third parties, causing huge losses.

Both the first and second trials ruled in favor of Galaxy Securities, holding that the margin contracts were signed by the investor and that Galaxy Securities had fulfilled its suitability obligations.

While most cases favor Galaxy Securities due to contractual clauses, this does not mean the firm’s compliance is flawless. As the business expands, whether rules are respected and investor protection is prioritized remains a question. These regulatory issues reveal the true “gatekeeper” quality of securities firms.

Leverage has a price, risk is priceless, markets are unpredictable, and law is relentless. The lessons written into these margin contracts are not just for one family—they serve as a warning for the entire securities market: how to draw clear boundaries and uphold bottom lines between protecting investors and holding “gatekeepers” accountable?

As the 315 Consumer Rights Day approaches, Yang Lin’s experience serves as a cautionary tale, a wake-up call for future investors. Remember: investing involves risks. Be cautious when entering the market, and build a strong “firewall” for yourself and your family. What other investment cases around you deserve attention? Share in the comments.