CSRC shows 'zero tolerance'
By Louise Ho |
December 2, 2011, Friday
|
Print Edition
Print Edition
China insists on "zero tolerance" against insider trading, Guo Shuqing, chairman of the country's securities regulator, warned yesterday as he signaled his strong no-nonsense determination to beef up regulations on securities trading.
Guo, who became head of the China Securities Regulatory Commission in November, said an important part of capital market reform is cracking down strongly on illegal acts in securities trading.
"We need to declare solemnly that the CSRC holds a zero tolerance attitude to crimes in insider trading and futures trading," he said at a forum on SME financing in Shenzhen.
"We are determined to investigate and prosecute any case that we discover."
The CSRC will continue to maintain stringent supervision over illegal behavior like market manipulation, embezzling funds and false disclosure of information, Guo warned.
Guo said that insider trading occurs when someone profits from devious means, with or without intention.
People are angry when someone steals vegetables from the market but many people don't pay attention when someone steals from the wallets of stockholders, he said.
"This is the true nature of insider trading but this is also the difficulty in preventing and fighting the crime," he said.
He asked the public to help the CSRC in its battle against illegal activities by providing tip-offs and evidence to help investigation.
Guo's tough stance on insider trading is good news to China's millions of retail stock investors, who have fallen prey to rat trading in which industry insiders took home millions of yuan while the wealth of stockholders was siphoned off.
Guo's speech is seen as China's latest efforts in stepping up supervision of insider trading as investigations and convictions against the offence have been rising this year.
Former star fund manager Li Xuli, investment director of Bank of Communications Schroders Fund Management Co, is being investigated for rat trading of over 100 million yuan (US$15.68 million) in September. Li faces a jail term of up to 10 years if convicted.
Xu Chunmao, former manager with Everbright & Pramerica, was sentenced to three years in jail on October 9 after he was convicted of gaining 2.09 million yuan from insider trading during February 2009 to April 2010.
The CSRC announced on Wednesday they have so far investigated 39 cases of insider trading this year.
A report by the research institute of the Shenzhen Stock Exchange yesterday disclosed a historical high of 13 convicted cases of insider trading in 2010.
These cases have risen from an average of 5.35 percent from 2007 to 2009 to 16.53 percent in 2010, according to the report.
New steps taken by the CSRC in the one month since Guo Shuqing's arrival:
Requiring start-up companies eyeing to list on ChiNext, the Chinese equivalent of Nasdaq, to include their dividend plans, which investors regard as positive;
Soliciting public opinions about new regulations on delisting of companies listed on ChiNext, which are seen as stricter in a bid to prevent unqualified public companies to list;
Cracking down on insider trading, including the rat trading case of Li Xuli, former investment director of Shanghai-based Bank of Communications Schroders Fund Management Co.
Guo, who became head of the China Securities Regulatory Commission in November, said an important part of capital market reform is cracking down strongly on illegal acts in securities trading.
"We need to declare solemnly that the CSRC holds a zero tolerance attitude to crimes in insider trading and futures trading," he said at a forum on SME financing in Shenzhen.
"We are determined to investigate and prosecute any case that we discover."
The CSRC will continue to maintain stringent supervision over illegal behavior like market manipulation, embezzling funds and false disclosure of information, Guo warned.
Guo said that insider trading occurs when someone profits from devious means, with or without intention.
People are angry when someone steals vegetables from the market but many people don't pay attention when someone steals from the wallets of stockholders, he said.
"This is the true nature of insider trading but this is also the difficulty in preventing and fighting the crime," he said.
He asked the public to help the CSRC in its battle against illegal activities by providing tip-offs and evidence to help investigation.
Guo's tough stance on insider trading is good news to China's millions of retail stock investors, who have fallen prey to rat trading in which industry insiders took home millions of yuan while the wealth of stockholders was siphoned off.
Guo's speech is seen as China's latest efforts in stepping up supervision of insider trading as investigations and convictions against the offence have been rising this year.
Former star fund manager Li Xuli, investment director of Bank of Communications Schroders Fund Management Co, is being investigated for rat trading of over 100 million yuan (US$15.68 million) in September. Li faces a jail term of up to 10 years if convicted.
Xu Chunmao, former manager with Everbright & Pramerica, was sentenced to three years in jail on October 9 after he was convicted of gaining 2.09 million yuan from insider trading during February 2009 to April 2010.
The CSRC announced on Wednesday they have so far investigated 39 cases of insider trading this year.
A report by the research institute of the Shenzhen Stock Exchange yesterday disclosed a historical high of 13 convicted cases of insider trading in 2010.
These cases have risen from an average of 5.35 percent from 2007 to 2009 to 16.53 percent in 2010, according to the report.
New steps taken by the CSRC in the one month since Guo Shuqing's arrival:
Requiring start-up companies eyeing to list on ChiNext, the Chinese equivalent of Nasdaq, to include their dividend plans, which investors regard as positive;
Soliciting public opinions about new regulations on delisting of companies listed on ChiNext, which are seen as stricter in a bid to prevent unqualified public companies to list;
Cracking down on insider trading, including the rat trading case of Li Xuli, former investment director of Shanghai-based Bank of Communications Schroders Fund Management Co.
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