Stock reg­u­la­tors heighten crack­down on in­sider trad­ing

Global Times US Edition - - BIZUPDATE -

China has been step­ping up efforts to crack down on in­sider trad­ing and other vi­o­la­tions as part of a broader re­form drive to en­sure mar­ket or­der and pro­tect in­vestors.

In the first half of the year, the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion (CSRC) im­posed 63 ad­min­is­tra­tive penal­ties that in­volved 27 com­pa­nies and 181 in­di­vid­u­als, with to­tal fines of 985 mil­lion yuan ($143.91 mil­lion), re­ported on Mon­day.

The CSRC im­posed eight bans on mar­ket en­try in the first six months of the year, ac­cord­ing to the re­port.

There were 26 in­sider trad­ing cases that led to 553 mil­lion yuan in penal­ties and ac­counted for 56 per­cent of the to­tal amount, said the re­port, which noted that many of the penal­ties and more than half of the bans were re­lated to in­sider trad­ing.

There were nine ad­min­is­tra­tive penalty cases of in­sider trad­ing just in May, ac­cord­ing to the CSRC.

“In terms of mar­ket size, China’s cap­i­tal mar­ket is rel­a­tively smaller than that of the US. But the high amount of penal­ties, nearly the same level as that of the US, shows that China’s mar­ket su­per­vi­sion is no looser than other coun­tries,” Li Dax­iao, chief econ­o­mist at Shen­zhen­based Yingda Se­cu­ri­ties, told the Global Times on Mon­day.

Stepped-up over­sight, es­pe­cially over in­sider trad­ing, is also in line with China’s com­mit­ment to open up its fi­nan­cial sec­tor to the world, Li said.

Merg­ers and ac­qui­si­tions in­volv­ing listed com­pa­nies are high-risk ar­eas for in­sider trad­ing, which se­ri­ously un­der­mines the fair and sound mar­ket or­der and dam­ages the le­git­i­mate rights and in­ter­ests of the ma­jor­ity of in­vestors, read a state­ment of the CSRC in May.

The state­ment fur­ther noted that CSRC will con­tinue to crack down on in­sider trad­ing and pro­mote the cap­i­tal mar­ket’s en­vi­ron­ment, to ef­fec­tively pro­tect the le­git­i­mate rights and in­ter­ests of smaller in­vestors.

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