Securities firms probed
BEIJING: Three of China’s biggest securities firms are under investigation in a fresh aftershock from this summer’s market plunge.
Shares in Citic Securities and Guosen Securities fell yesterday by the 10% daily limit after both said they were being probed by regulators. A third brokerage, Haitong Securities, issued a similar announcement after trading in its shares was suspended yesterday morning.
Authorities have detained securities executives, an investment fund manager, government employees and a reporter for a business magazine following the collapse in prices that began in early June. The announcements that brokerages themselves were under investigation represented a further widening of the probes.
The investigations were seen by many as an attempt by the ruling Communist Party to deflect blame for the 30% fall by the Shanghai index after state media encouraged the public to buy stocks.
Citic is China’s biggest brokerage and part of state-owned Citic Group. Guosen and Haitong are among the country’s 10 biggest securities firms.
In September, the police ministry announced Citic executives including its general manager, Cheng Boming, were suspected of insider trading and leaking sensitive information. The previous month, the official Xinhua News Agency said eight Citic employees and one current and one former employee of the market regulator were suspected of illegal stock trading.
A star Chinese fund manager, Xu Xiang, was detained on Nov 2 on suspicion of insider trading.
The market benchmark soared more than 150% beginning late last year before hitting a peak on June 12 and plunging.
The downturn triggered complaints that politically favoured insiders profited at the expense of small investors. Beijing responded by barring large shareholders from selling and ordering executives to buy back any recently sold stock.