CSRC mounts fresh move on share manipulation

China’s securities regulator on Friday announced a fresh round of its campaign to crack down on the manipulation of newly listed shares, which it said has seen excessive price surges and abnormal trading.

The regulator is investigating 16 cases related to abnormal trading and market manipulation of newly listed shares, said Zhang Xiaojun, the spokesman for China Securities Regulatory Commission.

“The share prices have risen substantially this year, with both trading volumes and market value showing apparent abnormal movements,” Zhang said.

“It (the abnormal trading) has accumulated risk in the market,” he said. “And many of the cases are suspected market manipulation.”

The regulator said it found in the ongoing investigation that the market manipulation involved using multiple stocks accounts and large amounts of capital to lift stock prices in a short period of time so as to lure retail investors to follow and reap profits.

It also found that some senior executives of listed companies collaborated with financial institutions, to rig stock prices through information disclosures, to cash out from the wild price swings.

“The illegal trading has misled and cheated investors and seriously damaged the pricing function of the market,” Zhang said, adding that the regulator would resolutely punish the stock manipulation and maintain market stability.

A string of listed companies havebeenorderedbythestock exchanges to suspend share trading and carry out self-examination on abnormal movements of their share prices.

The CSRC said the recent price surges of newly listed stocks reflected the immaturity and the over-manipulative mood in the A-share market, as retail investors tended to chase short-term gains in the market regardless of the companies’ performance.

An example of the wild price surges has been the stock of SMS Electric Co Ltd. The Shenzhen-listed company saw its stock price surge by 311 percent in just 12 trading days after it debuted. The company hassincesuspendedtradingof its shares, to examine the excessive price rises.

The securities regulator also announced a fresh round of on-site inspections into the country’s law firms over their securities business, including initial public offerings.