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China's stock probes entangle regulators, securities executives

Wednesday, September 23, 2015 - 07:26
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A former head of the Shanghai and Shenzhen stock exchanges is among the regulators and securities-firm employees publicly named as being under investigation after a summer slump in the nation's stocks.

[BEIJING] A former head of the Shanghai and Shenzhen stock exchanges is among the regulators and securities-firm employees publicly named as being under investigation after a summer slump in the nation's stocks.

The probes follow a market rout that wiped US$5 trillion from the value of Chinese shares. The government's response to the market slide, which has involved state purchases of shares and various restrictions on selling equities, has raised questions among investors about its commitment to market reforms.

Here is a list of those named by state media, including a journalist for business magazine Caijing. None of them is known to have been charged and Bloomberg News was unable to contact them.

Citic Securities Co declined to comment on the cases of its seven employees reportedly caught up in the investigations, with a press officer in Hong Kong saying that it was "business as usual" for the firm. No comment was immediately available from the China Securities Regulatory Commission or from Caijing.

Those said to be under investigation:

- Zhang Yujun, one of three assistant chairmen at the CSRC, is under investigation on suspicion of "severe disciplinary violations," the Communist Party's disciplinary committee said on Sept 16, using language that often refers to corruption probes.

Mr Zhang, who had previously headed the Shanghai and Shenzhen stock exchanges, was poised to become vice governor of the central bank and was going through a screening process, news portal QQ.com reported Aug 5. Caixin magazine also later cited market speculation that Zhang had been under consideration for that job, citing unidentified sources.

Mr Zhang started his career at the CSRC in 1995 and later worked at the Shenzhen Stock Exchange and Shanghai Stock Exchange, according to a profile on the website of the People's Daily.

Mr Zhang was reassigned back to the CSRC in 2012 and chaired at least two meetings with brokerages in August on efforts to bolster equities.

- Cheng Boming is the president of Citic Securities Co. He joined the company in 2001 and is a member of its executive committee. He has a PhD in economics from Shaanxi University of Finance & Economics. Mr Cheng is being investigated for alleged insider trading and leaking inside information, the official Xinhua News Agency reported on Sept 15, citing police.

- Yu Xinli is in charge of operations management at Citic Securities. Operations management is a part of Citic's stockbroking business, according to the firm's 2015 annual report. Mr Yu is being investigated for alleged insider trading and leaking inside information, Xinhua reported on Sept 15, citing police.

- Wang Jinling is the vice-manager of Citic Securities' information technology center, which has a direct reporting line to the executive committee, the annual report showed. Mr Wang is being investigated for alleged insider trading and leaking inside information, Xinhua reported on Sept 15, citing police.

- Liu Wei is a managing director of Citic Securities and a member of the firm's executive committee. He joined the company in 1997 and runs the company's capital intermediary business. He has a law degree from China University of Political Science and Law, the nation's top law school. Mr Liu is among four individuals who have confessed to alleged insider trading, Xinhua reported on Aug 31.

- Xu Gang is a managing director of Citic Securities. Mr Xu joined the company in 1998, is in charge of its stockbroking business and is a member of the firm's executive committee. He has a PhD in economics. Mr Xu is among four individuals who have confessed to alleged insider trading, Xinhua reported on Aug 31.

* Fang Qingli is the head of "financial business" at Citic Securities, Xinhua reported Aug 31. Fang joined Citic Securities in 1997. He was tasked with setting up Citic Securities' prime brokerage business in 2010, according to an interview with Caixin magazine in 2014. Mr Fang is among four individuals who have confessed to alleged insider trading, Xinhua reported on Aug 31.

* Chen Rongjie is the head of alternative investments at Citic Securities. Alternative investment is one of six businesses under Citic's trading operation, according to its 2015 annual report. Mr Chen is among four individuals who have confessed to alleged insider trading, Xinhua reported on Aug 31.

- Liu Shufan, a CSRC staff member, admitted insider trading in two companies last year that generated profits of more than 5 million yuan, taking bribes, and forging documents in connection with an apartment purchase, Xinhua reported on Aug 31.

- Wang Xiaolu, a journalist for Caijing, admitted wrongly reporting on July 20 that the CSRC was studying an exit from stock-market support measures, causing panic and confusion, Xinhua reported.

In the past two years, Mr Wang had interviewed big names in the securities industry including the CSRC's Zhang Yujun and Citic's Cheng Boming.

Six of the individuals - Citic's Liu, Xu, Fang and Chen, the CSRC's Liu, and Caijing's Wang - face "criminal compulsory measures," Xinhua reported Aug. 31.

Those measures may include arrest, detention, issuing a warrant to compel a suspect to appear, bail pending trial, or residential surveillance, according to the news agency.

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