Watchdog demands crackdown on insider trading
Updated: 2007-09-07 15:57
China's securities watchdog has demanded a crackdown on insider trading and price rigging following a stock had kept rising to the daily limit for consecutive 42 days driven by its false announcement of money injection.
*ST Jintai, a Shandong-based pharmaceutical firm that had been in the red for three years (hence the star prefix before its stock name), had kept rising to the daily limit of five percent since July 9, when it announced it would sell up to eight billion A shares to 10 investors.
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The stock plummeted to the daily five-percent limit on the following trading days. Its price continue to slide five percent to close at 19.59 yuan on Thursday.
The "abnormal fluctuation" of *ST Jintai has come under scrutiny and an official from Shandong securities watchdog was quoted by the China Business News on Thursday as saying that they are keeping a close watch on the stock.
Insider trading is becoming more difficult to detect and price rigging more diversified, posing a "huge challenge" to law enforcement on securities, according to Fan Fuchun, vice chairman of the China Securities Regulatory Commission (CSRC).
"With more frequent M&As and assets restructuring, insider information will accordingly increase," he said, adding that the rising number of insider trading cases has seriously disturbed securities market and harmed interests of investors.
The CSRC has adopted more specific standard to determine insider trading and price rigging and has achieved "positive" effects after a trial run for a time, he said.
Shang Fulin, head of CSRC, Tuesday called upon his staff to exert themselves on regulating the country's capital market based on the speech by the Chinese President Hu Jintao on financial reform.
In his speech, Hu urged related departments to develop a steady and healthy financial sector by enhancing its comprehensive competitiveness and risk control management.
The CSRC has also announced the conclusion of a three-year comprehensive overhaul of the country's securities dealers to reduce operation risks, closing 19 companies and suspending business licenses of several others. According to the commission, 104 securities companies in operation nationwide were up to standard.
Vice President Xi Xiaoming of the Supreme People's Court of China was quoted by Caijing Magazine on Monday as saying that law makers were deliberating upon the revision of the Securities Law, requiring those who engage in insider trading and price rigging to bear civil responsibility, such as returning properties or paying a penal sum.
Although related judicial interpretation is still being drawn up, courts at various levels can still receive such cases.
China's stock market rose to a new high on Thursday, with the benchmark Shanghai Composite Index up 1.56 percent to 5,393.66 points, and the smaller Shenzhen Component Index rose 0.40 percent to end the day at 18,073.76 points.
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