China stepped up its crackdown on market misconduct in the first eight
months of the year, with the number of new cases under investigation almost
double the same period of 2011, an official from China's securities regulator
said over the weekend.
A total of 291 tip-offs for cases
of insider trading and market manipulation were received in the first eight
months of this year, up 1.8 times from the same period of 2011, Zhang Yujun,
assistant chairman of the China Securities Regulatory Commission (CSRC) said
Saturday at the fourth China-ASEAN Summit Forum on Financial Cooperation &
Development in Nanning, capital of South China's Guangxi Zhuang Autonomous
Region.
The commission also launched 232
new investigations in the first eight months of the year, 1.9 times the same
period of last year, he said.
According to Zhang, the
international economic and financial situation has been getting more
complicated and changeable, and China's economy has been facing increasing
downward pressure since the beginning of this year.
"All these factors combined
pose great challenges to the stable operation of the Chinese capital
market," he said.
The commission will persist in
its zero tolerance policy toward illegal practices such as insider trading and
market manipulation, he said.
"The increase in the number
of cases does not mean there has been more misconduct in the market than in
previous years, but rather that the CSRC has strengthened market regulation,
especially since the new chairman Guo Shuqing took office at the end of last
year," Li Daxiao, director of the research institute at the Shenzhen-based
Yingda Securities, told the Global Times.
In just under a year, Guo has
unveiled a slew of confidence-boosting regulatory measures targeting insider
trading, market manipulation and false disclosure.
"As a result, an increasing
number of accounting and market manipulation scandals have been
unearthed," Li said.
In a recent case involving market
misconduct disclosed by the CSRC, a man surnamed Zhang in Central China's Henan
Province spread a rumor online in August that CITIC Securities, the country's
biggest listed brokerage, recorded a 2.9 billion yuan ($459 million) loss.
On the same day, another man in
East China's Zhejiang Province surnamed Chen spread a similar rumor claiming
that the CITIC Securities' chairman had been taken away by authorities.
The rumors sent shares of CITIC
Securities into a tailspin, but the company later denied the news and said the
plunge in share prices was caused by short-selling by equity funds.
The CSRC said early this month
that people who spread rumors will be punished according to law and the
commission was still investigating the case to see if any illegal practices had
been conducted, such as manipulating the market by spreading false information.
However, the most commonly seen
form of market misconduct was insider trading.
Among the 90 newly filed cases
since the beginning of this year, 57 involved insider trading, accounting for
63 percent, the CSRC data showed.
One analyst said that he thinks
insider trading penalties are "too light," because the maximum fine
is only 3 million yuan, which is not enough to deter people from engaging in
illegal practices.
"Apart from reinforcing
penalties as deterrence, regulators should also try to bring its system in line
with international practice and make it more open, transparent and
market-oriented," said Li Xunlei, chief economist with the Shanghai-based
Haitong Securities.
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