Center

Gov't cracks down on illegal stock issues

(Shenzhen Daily)
Updated: 2006-12-25 15:38

The government Friday vowed to clamp down on illicit stock issues and brokerages, saying such activities are becoming widespread and undermining social stability and financial security.

The move comes as a stock craze is again sweeping the country.

The domestic stock market, shaking off nearly five years of bearishness, has soared more than 90 percent this year, pushing moreretailinvestors to dump bank deposits in favor of shares to seek quick returns.

In an edict in major domestic securities newspapers, the State Council, or Cabinet, said it found many unlisted firms had made public share issues without approval, by promising to list the shares eventually at home or abroad.

It also found that many illegal securities brokerages had been set up to sell and trade shares issued by those unlisted companies. Some raised funds from the public by promising hefty returns and then ran away with the money, it said.

"Illegal securities activities are typically well concealed, highly deceptive and widespread. Large number of people are involved and many of those investors are poor folks such as retirees and laid off workers," the document said.

"Such activities have seriously harmed social stability and financial security," it said, ordering securities regulators, police and other authorities to set up a joint team to coordinate crackdown efforts.

Retail investors, long absent from brokerages' trading halls, are again piling back into the stock market this year as the main stock index sets a string of new record highs despite an avalanche of stock sales by major State-run firms.