Estimated read time: 2-3 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
BEIJING (AP) — Employees of one of China's biggest securities firms and one current and one former employee of its market regulator are under investigation on suspicion of illegal stock trading, state media reported Wednesday, amid the collapse of a stock price boom.
Three other brokerages announced they are under investigation for possible violations of rules on confirming the identities of customers.
China's main stock market index has fallen more than 40 percent since early June. On Wednesday, it fell another 1.2 percent, following declines of 8.5 percent on Monday and 7.6 percent on Tuesday.
Authorities have accused securities firms of manipulating prices, suggesting the ruling Communist Party might be trying to deflect blame for the collapse, which angered small investors.
Eight employees of state-owned Citic Securities Ltd., including one surnamed Xu, are suspected of "illegal securities trading," the Xinhua News Agency said. It gave no other details, but a leading Chinese business magazine, Caixin, reported on its website that Xu was the firm's managing director, Xu Gang.
The police ministry announced July 12 investigators had found "evidence to suspect that individual trading companies are illegally manipulating securities and futures exchanges." It gave no details of which firms were targeted.
The market benchmark soared more than 150 percent beginning late last year before hitting a June 12 peak and plunging. The downturn triggered complaints politically favored insiders profited at the expense of small investors. Beijing responded by barring large shareholders from selling and ordering executives to buy back any recently sold stock in their own companies.
In a statement through the Hong Kong Stock Exchange, Citic Securities said it had received no notice of an investigation.
Phone calls to Citic Securities' headquarters in Beijing weren't answered.
The firm is part of Citic Group, the Cabinet's main holding company. It is best known abroad for its 2012 purchase of Hong Kong-based brokerage CLSA Asia-Pacific Markets from France's Credit Agricole for $1.25 billion in the first major foreign acquisition by a Chinese broker.
Meanwhile, a staff member from the China Securities Regulatory Commission surnamed Liu and a former staff member are suspected of "insider trading and forging official documents and seals," Xinhua said. It gave no other details.
A journalist surnamed Wang and several other people also are suspected of fabricating and spreading fake securities and futures trading information, the agency said.
It gave no indication whether the cases were connected.
Separately, three brokerages said they were under investigation for possible violation of "know your customer" rules. GF Securities, Haitong Securities and HTSC made their announcements through the Hong Kong Stock Exchange.
In July, the securities regulator accused brokerages of improperly allowing customers to trade without giving their real names or to subdivide accounts to allow others to use them to trade. It ordered brokers to end the practice and to sever ties with unlicensed companies that lend money to finance trading.
AP Business Writer Kelvin Chan in Hong Kong contributed.
Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.