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Crackdown on accounts linked to illegal trading
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CHINA is cracking down on executives of the country’s biggest brokerage and thousands of stock accounts linked to illegal trading, in its latest efforts to restore order to markets pummelled by a rout since June.
The China Securities Regulatory Commission has so far targeted 3,255 accounts, shutting some and forcing others to trade through legal channels, it said.
The account violations included investors failing to register real names on their accounts, and using platforms that eased margin trading outside regulators’ oversight, the commission said.
Margin trading allows investors to use borrowed funds to trade stocks with only a small sum as deposit.
The regulatory crackdown began in July and the commission still has to check more than 2,000 accounts holding nearly 188 billion yuan (US$29 billion) worth of shares, according to a statement.
Chinese stocks fell over the past two days on news of the crackdown, analysts said, though the CSRC played down the impact.
Illegal business blamed
“It will not have an obvious impact on the market,” the commission said.
The CSRC earlier this month fined three companies a combined 453 million yuan for conducting “illegal securities business,” which has been blamed for volatility in the plunging markets.
Executives at CITIC Securities, the country’s biggest brokerage by assets, are being investigated in connection with insider trading and leaking inside information, Xinhua news agency said yesterday.
They include general manager Cheng Boming, operations official Yu Xinli and the vice manager of its information technology center, Wang Jinling.
Xinhua gave no further details of the case, but previous reports have said that eight CITIC officials were assisting in police investigations.
Suspected insider trading
A government crackdown on stock market irregularities has already entangled four other CITIC senior executives — Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie.
They have been placed under “criminal compulsory measures,” for suspected insider trading, according to a Xinhua report last month.
CITIC said in a statement earlier that the company was actively cooperating with the investigation and that it would check for potential problems within its business.
The probe also involves a journalist and several CSRC officials.
Wang Xiaolu, a reporter with Caijing business magazine, is accused of “colluding with others and fabricating and spreading fake information on securities and futures markets‚“ while Liu Shufan, a CSRC official, has confessed to insider trading, taking bribes and forging official seals.
Shares of the broker have plunged nearly 65 percent from this year’s high, worse than the Shanghai Composite Index’s 40 percent slump drop from a mid-June high.
The slump in China’s benchmark Shanghai stock index prompted the government to launch a rescue package, including the buying of equities by government-backed entities.
China’s benchmark index of the biggest listed stocks in Shanghai and Shenzhen closed down nearly 4 percent yesterday, while the Shanghai Composite Index dropped 3.55 percent.
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