21 December, AtoZForex.com, Lagos – The latest probe by Chinese regulators is in connection to China insider trading. Officials at the National Securities Regulator have come under scrutiny, along side some of the country’s largest broker firms like CITIC Securities and Guotai Junan Securities Co. China’s top anti-corruption agency has opened an investigation into whether officials at the national securities regulator profited from wrongful utilization of information, constituting insider knowledge of the country’s stock market rescue effort, as reported by The Wall street Journal.
Allegations of serious breaches of discipline
Last month, it was reported by the China Central Disciplinary Inspection Committee (CCDI) that there was an ongoing investigation of Yao Gang, a deputy head of the China Securities Regulatory Commission (CSRC). This was based on allegations of “serious breaches of discipline“. They are looking into whether Yao leaked classified information regarding the government’s market rescue. He is suspected to have wrongfully divulged information on this to executives at brokerages including CITIC Securities and Guotai Junan Securities Co, in an effort to front run so they could buy stocks before they were purchased by state funds, according to information from the Wall street Journal.
Both CITIC and Guotai have agreed to cooperate with the ongoing investigators’ needs, as stated in separate fillings by the brokers on the Shanghai and Shenzhen stock exchange. On the bright side, both CITIC Securities as well as Guosen Securities have informed the public that these regulators investigations do not affect the day to day operations.
Apart from the China insider trading case, CITIC is currently under investigation on a separate case. The broker came under scrutiny, stemming from the discoveries made by the Securities Association of China (SAC). China’s largest broker had overstated the value of some of its financial derivatives. According to the public sources, the Chinese broker has over stated about 1 trillion yuan ($156.51 billion) in its monthly reports from April to September this year. These inaccuracies are specific to the broker’s statistical reports on over-the-counter equity swap deals, some of which were carried out during the summer’s stock market rout, as clarified by SAC.
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